The Indonesian government is preparing a number of diplomatic moves related to the issuance of Prime Minister of Vietnam Decision No. 116/2017/ND-CP on Overseas Vehicle Type Approval (VTA). This regulation, which came into effect in Vietnam in January 2018, potentially eliminates about US$85 million of Indonesia’s foreign exchange earnings in the automotive industry up to March 2018.
Vietnam’s regulation has the potential to threaten – or completely stop – shipments of passenger cars with Harmonized System (HS) code 8703 – or completely built-up (CBU) car units – from Indonesia to Vietnam. Based on data from Statistics Indonesia (BPS), the value of exports of Indonesian passenger cars to Vietnam reached US$241.2 million in the January-November 2017 period, compared to US$17.78 million vehicles in the same period one year earlier. Indonesia is the third-biggest car exporter to Vietnam, after Thailand and China.
