In the letter, Mr. Bui Ngoc Huyen proposed solutions to remove difficulties for the automobile industry.

According to Hien, to development this industry, Vietnam needs to develop small vans of less than 5 tons and passenger cars of less than 1300cc as strategic products to meet the need of the local market. The goal of the industry is to manufacture models of good quality and cheap to serve the local market and to export to Africa, South America and Southeast Asia . To compete with other countries, the auto industry should receive preferential treatment in the first 10 years.

He wrote that local auto manufacturers did not dare to invest in components and spare parts because it is too costly and they could not have access to banking loans.

The Vinaxuki Chairman said that local auto manufacturers lack capital investment and working capital. To form the auto industry, he said that instead of relying on FDI, the Government should help local firms through soft loans.

He said that Vinaxuki is facing a lot of difficulties. Currently this firm is building many important plants but the investment has pushed Vinaxuki into severe capital shortage.

By December 31, 2013, Vinaxuki’s total debts reached VND600 billion ($30 million). The firm asked for more loans from Vietcombank and BIDV but they refused because they have not finalized capital restructuring for Vinaxuki.

According to Huyen, his company had to mortgage its assets at very low value.

Vinaxuki asked the government’s assistance, by allowing it to transfer its debts of VND630 billion to the Vietnam Development Bank for 8 years.

“Vinaxuki promises to transfer technology to small and medium-sized auto firms in the country so they can produce some details manufactured by us at the production cost of only 50-80% compared to the imported products,” he wrote.

He also proposed the government to reduce luxury tax or the taxable prices for four-seat cars of less than 1300cc from 45 % to 25 %, from 45 % to 15 % for seven-seat cars and from 45 % to 35 % for cars of less than 1500cc, to encourage people to use small and fuel-saved cars.

The government has asked the Ministry of Industry and Trade, the Ministry of Finance, the State Bank of Vietnam and the relevant agencies to consider Huyen’s proposals and report back to the Prime Minister in March 2014.

The government also asked the Finance Ministry to consider Vinaxuki’s loan transfer proposals and to have an answer to Vinaxuki.