Vietnam's Ministry of Finance has proposed extending automotive tax incentives by five years, until the end of 2032, which could affect business opportunities for Thai suppliers. The Thai Trade Center in Ho Chi Minh City outlined the proposal and its implications in a report published on October 16th, 2026.

The extension would continue Vietnam's vehicle manufacturing and assembly incentive programme beyond its scheduled expiry at the end of 2027. The draft remains under consideration by Vietnam's Ministry of Justice. The Ministry of Finance intends the extension to provide businesses with greater certainty when planning investments, capacity expansion, technology development and supply chains. Its stated objectives are to attract investment and increase Vietnam's role in regional automotive production and exports.

The draft would amend Decree No. 26/2023/ND-CP, which governs export tariffs and preferential import tariffs. The proposed changes cover seven areas: programme duration, the scope of tax benefits, Euro emissions criteria, eligibility assessment periods, minimum vehicle production volumes, rules for environmentally friendly vehicles and government procedures.

Opportunities for Thai automotive suppliers

The Thai Trade Center identified potential opportunities for Thai manufacturers of automotive parts, raw materials, machinery, production equipment and technology to supply vehicle manufacturers and assembly plants in Vietnam.

Thailand's vehicle and parts manufacturing sector could support Vietnamese factories and tier-one suppliers requiring materials and components that meet individual vehicle models' specifications, according to the trade office. Potential demand includes precision components, electronics, control systems and other parts for modern vehicles, as well as production machinery and equipment. Demand could increase if investment and manufacturing capacity expand in Vietnam.

Changes to environmental standards and regulations for environmentally friendly vehicles could also affect demand for electric vehicle technology, electronic components, energy-saving systems and emissions-reduction technology from Thai suppliers, the trade office said.

Proposed zero import duty for export-oriented production

Under the draft, qualifying manufacturers could apply a 0% import duty to components used to manufacture, process or assemble vehicles for export. The vehicles produced using these components would have to be exported within one year of registration of the import customs declaration.

To qualify for the zero-duty rate at importation, a manufacturer would need an existing vehicle export contract or a contract to sell vehicles to a company that already held an export contract when the customs declaration was registered.

Manufacturers unable to meet these conditions at importation could pay the applicable duty and apply for a refund after exporting the vehicles. Alternatively, they could participate in the vehicle manufacturing and assembly incentive programme, provided they met its eligibility requirements.

According to the Thai Trade Center, the proposed mechanism could reduce input costs, limit the working capital tied up in imported components and affect liquidity and cash flow management. These factors are relevant to exporters competing on price and delivery times.

Manufacturers using the concession would need to maintain records and traceability systems linking imported components to production and subsequent exports. Failure to export the vehicles within the prescribed period could result in import duty liabilities and additional charges under the applicable regulations.

Proposed changes to minimum production volumes

The Thai Trade Center's October 16th report outlines proposed increases in minimum production thresholds across three phases: 2027, 2028-2029 and 2030-2032.

For petrol or diesel passenger vehicles with no more than nine seats and an engine capacity not exceeding 2,500cc, the draft proposes minimum total production volumes of 23,000 vehicles in 2027, 25,000 in 2028-2029 and 29,200 in 2030-2032. These figures remain proposals and are not final requirements.

The draft also provides for phased adjustments to production thresholds for trucks, minibuses, scheduled-service buses and other passenger buses. The Thai Trade Center said higher production thresholds could lead manufacturers to expand capacity and increase production volumes. However, they could also increase financial and operational pressures on smaller manufacturers and businesses with limited capital or technological capabilities.

Changes to Euro emissions criteria and regulations governing environmentally friendly vehicles would also require manufacturers to review their production technology, quality control procedures and environmental compliance systems, the trade office said.

Recommendations for Thai businesses

The Thai Trade Center advised Thai businesses to review the final conditions governing the 0% import duty, export deadlines, refunds, customs requirements and technical standards before making investment or trading decisions based on the scheme.

It also recommended establishing relationships with vehicle manufacturers, assembly plants and suppliers across tiers one to three, while ensuring that products meet individual manufacturers' standards and specifications.

Thai suppliers should review their production standards and traceability systems to ensure compliance with quality, environmental and export requirements, the trade office said. Technology cooperation with Vietnamese partners could enable businesses to expand beyond exporting goods to include investment in Vietnam and longer-term partnerships within the country's automotive supply chains.