Transitioning to Sustainable Transportation in Vietnam

Sustainable Transportation in Vietnam

Jaka Consulting – Vietnam is currently developing various transportation options to support its overall infrastructure, ranging from its terrain category to ridership. Over the last decade, the annual percentage increase of four-wheel passenger vehicles has dramatically increased. However, the country’s number of cars remains one of the lowest in the region compared to its large population due to the popularity of two-wheel motorbikes.

Motorbikes are affordable, compact, and flexible modes of transport catering to Vietnam’s limited space on roadways across the country. Today, over 95 percent of vehicles circulating in the country are motorbikes, positioning Vietnam as the fourth most prominent user of motorbikes in the world. However, with the accelerated industrial growth alongside the efficient energy regulations supporting Vietnam’s sustainable development, the country plans to switch to fully electric vehicles by requiring businesses and fleets to possess a comprehensive understanding of existing and future operational needs along with the cost associated with transitioning to the new transportation and energy system. 

Supportive Government Initiatives 

Green revolution in Vietnam transport industry will need to go through numerous milestones before reaching the final goal of zero emissions. The country has jumpstarted initiatives and transformative regulatory frameworks to leverage its renewable energy boom by maximizing the budget allocation on infrastructure projects towards a green and smart nation. Additionally, the nascent rise of Vietnam’s electric vehicle industry has proven that its consumers are becoming more aware of their usage and environmental impact. The country has already circulated 1.000 electric passenger carts and provided over 2.000 battery charging stations nationwide. By 2022, Vietnam aims to establish over 20.000 battery charging stations network with the help of VinFast, catering to 20 percent of Hanoi public transport demand for renewable energy. 

Vietnam’s government policies in electric vehicles is divided into two segments – for consumers and manufacturers. The government has implemented special consumption tax rates for consumers for electric cars, lowering the rate to around 15 percent. The government hopes that consumers will opt for electric vehicles than conventional cars requiring over 150 percent tax rate through the measure.  Additionally, imported components for manufacturing electric vehicles are released from tax as long as the minimum production requirements in the first two tax periods are fulfilled. However, the government has set no specific target in terms of the ratio of green vehicles sales compared to the conventional cars for the manufacturers. 

Responsive Private Players

Following the accommodative measures from the government, car manufacturers such as VinFast, Mitsubishi, and Toyota have expressed their support in transitioning to electric vehicles. VinFast has started to accept purchase orders for their first edition of electric cars in March 2021, expecting to deliver the first batch in November 2021. Mitsubishi Motors has also signed a Memorandum of Understanding with the Industry Agency to conduct a joint study of efficient electric vehicle usage and the public policy programs that would potentially support the adoption of sustainable automotive technology. Furthermore, Toyota has similarly launched the hybrid version of its Corolla Cross SUV, making it the first hybrid vehicle to be sold in Vietnam and reaching over 1/7 of the produced cars so far. 

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