Decision No. 20/2003/QĐ-BKHCN on the issuance of the "Regulations on Classifying Automobile Manufacturing and Assembly"

DECISION OF THE MINISTER
MINISTRY OF SCIENCE AND TECHNOLOGY
Regarding the issuance of "Regulations on Classifying Automobile Manufacturing and Assembly"

_____________________

THE MINISTER
MINISTRY OF SCIENCE AND TECHNOLOGY

Pursuant to the Goods Quality Ordinance 1999;

Pursuant to Decree No. 54/2003/NĐ-CP dated 19/5/2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Science and Technology;

Pursuant to Decision No. 175/2002/QĐ-TTg dated 03/12/2002 of the Prime Minister approving the strategy for developing the automobile industry in Vietnam Male until 2010, with a vision to 2020;

Pursuant to the guidance of the Prime Minister in Notification No. 82/TB-VPCP dated 16/6/2003;

At the request of the Director General of the Standardization, Measurement, and Quality Control Department,

 DECISION:

Article 1. Issued together with this Decision are "Regulations on Classifying Automobile Manufacturing and Assembly."

Article 2. This Decision shall take effect fifteen days from the date of publication in the Official Gazette and shall replace Decision No. 17/TĐC-QĐ dated February 17, 1992, Decision No. 182/TĐC-QĐ dated August 13, 1994, and Decision No. 176/TĐC-QĐ dated July 18, 1995 of the General Bureau of Standards, Metrology, and Quality Control.

Article 3. The Director General of the Standardization, Measurement, and Quality Control Department and related organizations and individuals are responsible for implementing this Decision./.

REGULATIONS ON CLASSIFYING AUTOMOBILE MANUFACTURING AND ASSEMBLY
(Issued together with Decision No.: 20/2003/QĐ-BKHCN
dated 31/7/2003 of the Minister of Science and Technology)

1. General Provisions

1.1. These regulations apply to enterprises approved and licensed by competent state authorities to operate in the field of automobile manufacturing and assembly in Vietnam.

1.2. Automobile assembly refers to the use of all new components to assemble various types of automobiles according to design, bearing domestic or foreign trademarks, in compliance with current regulations on quality management, industrial property, technology transfer, and other related laws.

1.3. Definitions:
1.3.1. An automobile is a road vehicle with a structure and technical characteristics defined in Vietnamese Standard TCVN 6211:1996 - Road Transport Vehicles - Type - Terminology and Definitions (or any subsequent amendments or revisions to this standard).
1.3.2. Components refer to parts, assemblies, and subassemblies used to complete an automobile.
1.3.3. Domesticated components are those produced or manufactured domestically to replace imported ones.
1.3.4. Complete Knock Down (CKD) assembly involves using synchronized components from imported sources to assemble a complete automobile.
1.3.5. Incomplete Knock Down (IKD) assembly involves using unsynchronized components from imported sources and domesticated components to assemble a complete automobile.
1.3.6. The domestication ratio of an automobile is the percentage of domesticated components relative to the complete automobile.
1.3.7. The target domestication ratio is the domestication ratio that must be achieved during each period, as specified in the Strategy for Developing the Automobile Industry in Vietnam until 2010, with a vision to 2020, approved by the Prime Minister in Decision No. 175/2002/QĐ-TTg dated December 3, 2002, specifically as follows:
For general vehicles: achieve a domestication ratio of 40% by 2005 and 60% by 2010 (with engines striving to reach a domestication ratio of 50% and transmissions reaching 90%).
For specialized vehicles: achieve a domestication ratio of 40% by 2005 and 60% by 2010.
For high-end vehicles: joint ventures producing passenger cars must achieve a domestication ratio of 20-25% by 2005 and 40-45% by 2010. High-end buses must achieve a domestication ratio of 20% by 2005 and 35-40% by 2010.

2. Requirements for CKD assembly type

2.1. The CKD assembly type must meet the following requirements:
Body: Separated into sections, not welded or painted with electrostatic paint. Special cases require approval from the competent state authority.
Frame: Already connected but not painted with electrostatic paint. Frames longer than 3.7 meters may be painted with electrostatic paint before importation.
Engine: Complete and can be directly installed with the clutch and transmission.
Drive system: Either assembled or unassembled with the braking system.
Electrical system, lights, and amenities: Wiring, electrical panels, lights, and amenities inside the automobile are separate.

2.2. Annexes 1, 2, 3, and 4 provide illustrative examples of the structural disassembly level of components for various types of automobiles under the CKD assembly type. If components have different structures, they will not be considered when determining the assembly type.

3. Requirements for IKD assembly type:

The IKD assembly type has a similar level of component disassembly as the CKD assembly type but includes some domesticated components.
Enterprises must strive to achieve the target domestication ratio as stated in Section 1.3.7 above. Appropriate incentives and management measures to promote enterprises in achieving this goal will be stipulated and issued by competent state management authorities.

4. Method for Determining the Domestication Ratio

The domestication ratio is determined by the formula: N = Z - I
Where:
N is the domestication ratio of the automobile.
Z = 100%, representing the value ratio of the complete automobile.
I is the percentage (%) of the total value of imported components.
The Ministry of Science and Technology will specify the percentage value of synchronized components for each type of automobile in another document.

5. Implementation Organization
The Ministry of Science and Technology assigns the General Bureau of Standards, Metrology, and Quality Control to organize guidance and inspection of the implementation of these regulations at automobile manufacturing and assembly enterprises./.