Drafting Motorbike Master Plan under Market
Orientation and Globalization*
Dr. Kenichi Ohno
Professor, National Graduate Institute for Policy Studies (GRIPS)
Research Director, Vietnam Development Forum (VDF)
Email: kohno@vdf.org.vn

1.

Introduction

1.1. Methodology and Content
As the process of market orientation and international integration deepens in Vietnam,
industrial strategy formulation must adapt to the changes which are brought about by thisprocess. Market forces and global competition increasingly determine the performance ofeach industry as well as the winners and losers among enterprises. In many industries, private
enterprises, including foreign private enterprises, are becoming major players instead ofstate-owned enterprises. Multinational corporations decide products, output, production sites,
procurement, investment, export and import as integral parts of their global business strategies.
This means that a large portion of industrial activity in Vietnam is now taking place outside
the direct control of the government. These trends are also visible in the motorcycle industry.
This master plan tries to respond to these changes by adopting a new drafting methodology
and a new content structure.
With respect to drafting methodology, stakeholder involvement and inter-ministerial
coordination have been strengthened. For any industrial master plan, the most important
stakeholders are business enterprises that must carry out the plan. In the second quarter of
2006, the Joint Working Group (JWG) was formed to draft the motorcycle master plan under
the official recognition of and in close cooperation with the Ministry of Industry. Its members
included policy makers, businesses and experts. The Vietnam Development Forum, a joint
research project between the National Economics University in Hanoi and the National
Graduate Institute for Policy Studies in Tokyo, acted as a coordinator. JWG conducted a large
number of internal discussions, and received information and views from motorcycle-related*This manuscript is combination of the first two chapters in the preliminary draft on Motorbike Master
Plan. The draft was prepared by the Motorbike Joint Working Group (JWG), which included producers,
experts and officials, in the period from April 2006 to April 2007. The Vietnam Development Forum (VDF)
coordinated its activities. Producers, experts and officials outside the Motorbike JWG were also consulted.
This draft is an open document made available to everyone for comments. For inquiries or comments,
please contact VDF at hellovdf@vdf.org.vn or +84-4-9362633. The full draft can be read at
http://www.vdf.org.vn/jwg.htm
7enterprises and researchers as broadly as possible. In preparing each chapter and determining
policy measures, consultations with related ministries and agencies were held. Thesemethodological innovations were pursued within a relatively tight schedule under which JWG
worked. Except for a few confidential cases, key documents and meeting minutes of JWG
were uploaded in a website for openness and transparency.
With respect to content structure, demand-side issues are given approximately the same
weight as supply-side issues. User concerns such as traffic safety, congestion and air pollution
are analyzed fully in separate chapters, in addition to more standard chapters dealing withproduction, demand forecasts and industrial capability. The future of motorcycles is
considered to be not only an industrial issue but also a social issue. This is necessitated by thefact that motorcycles take up a very unique position in the Vietnamese society, whose
popularity and density in use, especially in urban areas, have an enormous bearing on thequality of life of all people, including motorcycle riders and non-riders. For this reason, thepresent master plan covers a much wider ground than the existing guideline for master plancontent set forth by the Ministry of Planning and Investment and the Ministry of Industry.
1.2. The Role of Government
In an increasingly integrated market with a large presence of foreign producers, such as
the motorcycle market in Vietnam, the basic role of the government should be to support thehealthy growth of the industry by understanding and responding to its needs instead ofdictating it. Private business enterprises are the primary decision-makers and executors ofindustrial dynamism, but the government also has an important role of providing supportive
visions, rules and measures to ensure that the industrial playground is predictable, fair, and inline with the general interest of the nation.
More specifically, three roles of the government are identified as crucial for the healthy
growth of the motorcycle industry, and chapters are arranged accordingly to discuss them.
First, the government should clarify policy orientation and make indicative projections so thatenterprises can use them as a basis for their business decisions. Second, the government
should set and enforce realistic and meaningful standards for quality, safety, environment andintellectual property rights. Third, the government should help to upgrade Vietnam’s industrial
capability with particular attention on supporting industries and industrial human resources.
This master plan contains projections of motorcycle use, sales and production. These are
the results of intensive discussion among businesses, policy makers and experts. They aremeant to be indicative and guiding, and subject to modification as circumstances change,rather than rigid targets that are set officially and must be fulfilled under any circumstances.

8

2.

The Role of Motorcycles in Vietnamese Society

2.1. Overview
When society develops, demand for personal and commercial transport also rises. The
means of transport must respond to increasing demand in all aspects of quantity, quality, andmodal diversification. Each transport means has its merits and demerits. The problem is toselect and combine each transport means in a way that maximizes merits and overcome
demerits, under the specific natural, economic, and social conditions of our country in thisparticular development stage. We must satisfy people’s travel need by providing convenienttransport modes while at the same time ensuring traffic safety, clean environment, and othersocial demands.
During the period 1995-2005, the Vietnamese economy continued to operate under themarket mechanism with socialist orientation, achieving relatively high growth of 8% orhigher in consecutive years. As a result, the speed of urbanization as well as demand for trips
and commercial transport also increased. Since public transport systems are currently
underdeveloped, people tend to possess personal means of transport such as motorcycles andautomobiles to satisfy their travel demand.

Figure 1: Motorcycles and automobiles in circulation
Million 20
18

Motorcycles

16

Automobiles

14
12
10
8
6
4
2
0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Motorcycles 2.77 2.81 2.85 2.90 3.28 3.58 4.21 4.83 5.20 5.60 6.48 8.36 10.27 11.38 13.38 16.09
Automobiles 0.25 0.30 0.29 0.30 0.32 0.34 0.39 0.42 0.44 0.47 0.49 0.56 0.61 0.68 0.77 0.89

Source: National Traffic Safety Committee. Auto data in 1990-1994 are obtained from VRA.

According to the data of the National Traffic Safety Committee and the Traffic Police
Road and Railroad Department (Figure 1), motorcycles and automobiles have long been thetwo principal means of transport in Vietnam in terms of absolute volume as well as
contribution to cargo transport in the whole country, especially urban areas and economically9developed areas. Between them, motorcycles are by far the dominant means of transport.
At the end of 2005, Vietnam had 16.09 million registered motorcycles and 0.89 million
registered automobiles in use. Compared with the year 1990, this is an increase of 5.8 times
for motorcycles and 3.6 times for automobiles. The use of both transport means rose very
rapidly, especially motorcycles.
The studies of Hanoi and HCMC urban planning by the Ministry of Transport and JICA
confirm that motorcycles are the dominant transport mode of residents in large cities1. In 2005,
motorcycles served 62.7% (Hanoi) and 77.9% (HCMC) of travel needs, while the shares ofpassenger cars and taxis were only 3.5% (Hanoi) and 5.9% (HCMC), and the shares of buses
were 8.4% (Hanoi) and 5.9% (HCMC). Clearly, the motorcycle is the preferred choice ofurban population, providing personal mobility in relatively short distances and frequent trips,
under the condition that public transport is underdeveloped, car prices are too high for thegeneral public, and motorcycles often travel faster than automobiles. Many people also use
motorcycles to make living.

Figure 2: Motorcycle and automobile density by province, 2005
Automobiles per 1000 persons
60
Hanoi

50
HCMC

40

30
B. Duong

Danang20
BR-VT
D. NaiK. Hoa10
Q. Tri

0
0

100

200

300

400

500

600

Motorcycles per 1000 persons

Source: National Traffic Safety Committee. See Appendix for original data.
1

The Study on the Urban Transport Master Plan and Feasibility Study in Ho Chi Minh Metropolitan Area
(HOUTRANS), 2004, and the Hanoi Integrated Development and Environmental Programme (HAIDEP),
2007. Both plans were supported by JICA technical assistance.
10

Although the “Master Plan for Transport Infrastructure in Hanoi and Ho Chi Minh up to
the Year 2020” prioritizes investment in transport infrastructure such as roads, railroads,
subways, and public buses, it also foresees that the use of motorcycles in Hanoi and HCMC
will remain relatively high in the future, namely 30% in Hanoi and 35% in HCMC in 2020.
At the same time, living conditions in rural areas are expected to improve by 2020, andrural road systems are also likely to be upgraded. Under these circumstances, rural demand
for motorcycle use will surely rise, especially in light of the fact that current density of
motorcycle use in rural areas is still very low.
At present, the geographical distribution of motorcycle use is not uniform within
Vietnam. In absolute volume, the registration and circulation of motorcycles are concentrated
naturally in cities and provinces with a large population or a dynamic economy, or both. They
include HCMC, Hanoi, Dong Nai, Hai Phong, An Giang, Thanh Hoa, and Nghe An. In termsof density of use, Hanoi and HCMC again lead the nation with one motorcycle for every two
persons, followed by Da Nang, Binh Duong, Dong Nai, Quang Tri, Ba Ria-Vung Tau, andKhanh Hoa, where there is at least one motorcycle for every four persons. All other cities andprovinces have less motorcycles per person. Incidentally, the density of automobile use ispositively correlated with the density of motorcycle use (Figure 2).
The above considerations lead us to the conclusion that motorcycles will continue tocontribute significantly to road transportation in Vietnam, at least up to the year 2020. Thus,
the development of motorcycles is an objective requirement for Vietnam, and we should
continue to study how motorcycles can co-exist harmoniously with other transport means andhow they can better serve consumers’ needs.
2.2. Development of the Motorcycle Industry from 1990 to 2005
Before 1995, Vietnam had a relatively small motorcycle stock in use, at about 2-3
million units, and it increased slowly by tens of thousands of units per year. Most of the
motorcycles were imported.
During the period 1995-1999, FDI motorcycle assemblers invested in Vietnam andbegan production, at first using imported parts but gradually increasing parts localization.
Consumers’ demand for motorcycles increased annually. However, production volume
remained relatively low during this period, and prices were high in comparison with theincome level of most people.
Around 2000, local motorcycle assemblers suddenly increased in number, producing
motorcycles with parts originating mostly in China, with average to moderate quality andreasonable prices relative to people’s income. From 2000 to 2003, this type of motorcycles
occupied as much as 60-70% of the domestic market. In response, FDI enterprises adjusted
business strategies and changed models to regain market share. Some FDI producers
11introduced popular, low-priced models while other FDI producers targeted up-markets withfashionable style and new colors. At the same time, people’s living conditions continued to
improve. As a result, motorcycles in use increased rapidly by about 2 million units per year,
except in 2003 when Hanoi and HCMC applied policies to limit the number of motorcycles.
At the end of this process, over-capacity and severe competition exerted significant
downward pressure on the prices of “Chinese” motorcycles produced by Vietnamese
assemblers. Many consumers also turned away from their products which failed to satisfy
their quality demand. This prompted them to revise business strategies for survival, which
included enhancing in-house production, becoming suppliers of FDI assemblers, building
supplier networks, turning to sales and marketing, or exiting from the industry. Direct parts
import from China fell and domestic production of “Chinese” parts increased.
From around 2003 to present, motorcycle demand continued to expand strongly, withmarket shares shifting decisively back to FDI assemblers. Apart from robust income growth,
motorcycle demand has been fueled by the removal of demand-restrictive measures such asparts import quotas (2002-2005) and registration control in large cities (2003-2005). By 2006,
Vietnam’s motorcycle market reached nearly 2 million units per year, with an expectation offurther expansion in the future. This domestic demand size is sufficient for major assemblers
to aggressively introduce new models and for parts suppliers to willingly invest in Vietnam.
2.3. International Comparison and Vietnam’s UniquenessAsia dominates in the global market of motorcycles, with roughly 95% of total
production originating in several Asian countries. Asian markets are also dynamicallygrowing in sharp contrast to saturated markets in developed countries. China, India andIndonesia are the top three producers, with annual production volumes of 17.2, 12.7 and 5.1
million units each. Japan, Thailand and Taiwan also have significant production size, witheach producing 1.8, 1.5, and 1.4 million units in 20052. With an expected production volume
of over 2 million units in 2007, Vietnam has now joined the group of largest motorcycle
producers in the world.
There are three reasons for the popularity of motorcycles in Asian developing countries.
First, the region contains large tropical and subtropical areas with high temperature andfrequent showers, a climate particularly suitable for motorcycle use. Second, rapid income
growth, and associated industrialization and urbanization, are boosting individual trip needs.
Third, despite that, public transportation generally remains underdeveloped. For example,
Bangkok, Jakarta, Manila, Hanoi and HCMC have no or few urban rail lines in comparison
with more advanced cities such as Tokyo, London, Paris and New York which have extensive
networks of commuter rails and buses, subways, sky trains and other urban mass rapid transit(UMRT) systems.
2

Honda, World Motorcycle Facts and Figures, 2006.
12But even by Asian standards, Vietnam’s use of motorcycles is highly intense and unique.
The motorcycle is a “popular vehicle” in Vietnam across all ages, genders and occupations. It
is used not only for delivering commercial goods but for virtually all personal
purposes--commuting, shopping, dating, visiting friends, shuttling children to and from school,and even for sheer fun3. Motorcycle use is particularly heavy in urban areas, where it is by far
the preferred means of transport for all residents. Both Hanoi and HCMC have flat terrain,compact urban areas relative to population size, and deep and narrow lanes crisscrossing thebuilt-up areas. These characteristics are particularly amiable to motorcycle use. The contrast
between severe shortages of automobile parking and well-developed motorcycle parking atpresent also tends to sustain the popularity of motorcycles. Thus, the motorcycle is the key
determinant of the mobility, comfort, safety, and health of the Vietnamese people, with a great
influence on their life style and life quality.
Additionally, the motorcycle market in Vietnam has the following features which are notseen in most other developing countries.

Figure 3: Motorcycle holdings in Asia, 2000
Registered motorcycles per 1000 persons

600
500
400
300
2005

200
2000

100
Pakistan

Philippines

China

Indonesia

Vietnam

Mauritius

Cambodia

Thailand

Malaysia

Taiwan0

Source: Fukuda, Nakamura, and Takeuchi (2004)—see footnote 4.

3

The survey by Prof. Atsushi Fukuda (Nihon Univ.) conducted on 130 families in Hanoi in March 2003
shows that 97% of families possess at least one motorcycle, and each motorcycle is often used by morethan one person. Top reasons for the primary user are commuting (54%), going to school (14%), relaxing(10%), going to hospital (7%), shopping (4%), and dating (3%). Top reasons for other users are relaxing(28%), commuting (18%), going to school (10%), shopping (15%), additional study (8%), and dating (7%).
It can be said that most people use motorcycles for multiple purposes, in addition to the basic use ofcommuting or going to school.
13

First, motorcycle use in Vietnam is disproportionately high relative to its automobile use.
There are only 12 countries in the world where the number of registered motorcycles
surpasses that of registered automobiles4. Among them, Vietnam is by far the leading country,with the ratio of motorcycle stock to automobile stock of 13.3 in 2000 and 18.1 in 2005.
According to the 2000 data, the next country in this ranking was India (5.6), followed by
Thailand (5.4), Indonesia (4.6), Cambodia (4.2), China (3.1), Pakistan (3.0), Taiwan (2.4),
Bangladesh (2.4), Philippines (1.6), Mauritius (1.3), and Malaysia (1.3). Vietnamese people
are extremely fond of motorcycles, and this fact should be taken into account in formulatingtransport policy.
Second, as noted above, there is a significant urban-rural gap in motorcycle use.
Motorcycles in Vietnam are concentrated in two largest cities and their vicinities. In rural andremote areas where income levels are still low, fewer motorcycles are owned per person(Figure 2). Vietnam’s urban markets are near saturation in terms of number of motorcycles,
but rural markets are likely to grow strongly and the urban-rural gap is expected to narrow inthe medium to long run. Although Taiwan, Malaysia and Thailand had higher
motorcycle-per-person ratios than Vietnam in 2000 (Figure 3), cars are far more visible thanmotorcycles in Taipei, Kuala Lumpur or Bangkok. This is because motorcycles in thesecountries are more uniformly spread geographically5. National average comparison hides theunevenness of motorcycle distribution within Vietnam.
Third, the Vietnamese motorcycle market is very dynamic. Not only the sale has
increased, but what consumers expect from motorcycles is also changing rapidly. Until thelate 1990s, the motorcycle was considered a means of saving that retained good value overtime as well as a practical means of transport. Around 2000, with a large inflow of cheap but
low-quality “Chinese” products, the motorcycle suddenly became a commodity. After 2003,
the popularity of “Chinese” motorcycles declined as demand shifted toward high-quality,
stylish motorcycles and scooters, especially in urban areas. These shifts are brought about by
an interaction of changing consumer tastes, international influences, and manufacturers’
business strategies. Now, with a domestic market of over 2 million units per year, motorcycle
assemblers will have many business options including the broadening of market segments
4Compiled from Atsushi Fukuda, Fumihiko Nakamura, and Kenzo Takeuchi, “Current Situation ofMotorcycle in Metropolis of Southeast Asia and its Issues,” Kokusai Kotsu Anzen Gakkaishi (Journal ofInternational Association of Traffic and Safety Sciences), vol.29, no.3, Dec. 2004 (in Japanese). However,numbers in the text should be treated with care since international comparison data are somewhat
inconsistent.
5
In Thailand, the urban-rural gap is not very large. In 2003, there were 2.47 persons for each motorcycle in
Bangkok, and 3.61 persons for each motorcycle in all other areas, with the national average of 3.46 persons
per motorcycle (IDE-JETRO, Motorbike Industries in Asia, 2005, in Japanese). In Vietnam, thecorresponding figure in 2005 for Hanoi and HCMC was 2.16 persons for each motorcycle, and 6.14
persons for each motorcycle in the rest of the country, with the national average of 5.11 persons per
motorcycle (Appendix to Chapter 1). Hanoi and HCMC have higher motorcycle density than Bangkok, but
rural Vietnam has lower motorcycle density than rural Thailand.
14with new models and reorganizing domestic and global suppliers.
2.4. Transport Modal BalanceCars, motorcycles and public transportation systems are three pillars of transportation inany developing country. Each of these transport modes has merits and demerits. It is people
who make the final modal choice based on their income, travel need, climate and geography,
and the existing state of transport infrastructure. However, policy can also make a significant
difference by guiding people’s choice. The crucial policy question is how to combine the threeprincipal modes to achieve maximum transport benefits while reducing social and economic
costs. This will require encouragement of certain modes and restraint on others with effective
policy instruments under a consistent roadmap.
The motorcycle excels in personal flexibility, allowing the rider to make door-to-door
trips at any time without waiting, walking or transfer. It is also efficient in space use,
occupying about one-fourth of space on road and in parking in comparison with a car whenmotorcycles are dominant, and about one-half of space of a car in mixed traffic. Its small size
and agility permit faster urban travel than a car, which reduces congestion and overall
pollution. However, if motorcycle use and maintenance are unregulated, there is a risk ofexcessive traffic accidents and exhaust emission.

Table 1: Comparison of three principal modes in urban travel setting
Motorcycles

Automobile(personal use)

Urban Mass Rapid
Transit (UMRT)

Personal flexibility

HighHigh to moderate

Low

Comfort and privacy

Moderate

High

Low

Low
(depends on occupancy)

High

Low
(depends on occupancy)

High

Moderate

Low

High

Low
(if unregulated)Low(if unregulated)

Moderate(if unregulated)Low(if unregulated)Space efficiency
Energy efficiency
Predictability ofpeak-hour travel time
Traffic safety
Environment
friendlinessHigh to moderate(moderate if mixed
traffic)
Low to moderate(depends on occupancy)

High
High

The strength of the automobile is comfort and privacy. In a closed air-conditioned spacewith soft seats, travelers can enjoy scenery, audio or conversation, or just take a rest. For thisreason, private car use becomes increasingly popular as income rises. However, automobiles
are not very efficient in space and energy use, especially in single occupancy. If urban roadcapacity is insufficient, peak-hour travel time becomes very long and highly unpredictable in15

comparison with other modes.
The urban mass rapid transit (UMRT) system, which combines commuter rail networks
with rapid bus transit, is highly desirable in modern cities with large travel demand. If it isoperated competently and used by most people, it can significantly reduce road congestion,
traffic accidents and environmental damage. Cities such as Tokyo, Seoul, London and Parisall have extensive UMRT systems that crisscross the entire urban and suburban areas. Whilepublic transport commuters in these cities sacrifice personal flexibility, comfort and privacy,
they usually feel better off because air is cleaner, travel time is shorter and more predictable,
and there is no need to compete with other drivers.
Motorization, or the expansion of personal car use, is inevitable in any rapidly growing
developing country, but its speed is controllable by policy. In more developed countries,
personal means of transport shifted from motorcycles to automobiles as income rose.
Vietnam’s motorization is at a very early stage, and it is expected to continue for aconsiderable time, provided that robust GDP growth is sustained. However, a rapid increaseof automobiles from a small base even now is already causing traffic conflicts withmotorcycles and bicycles in urban areas. Vietnam’s cities are not yet equipped with
infrastructure required for a large number of automobiles, such as expressways, bypass andring roads, multi-lane trunk roads, overpasses, bridges, tunnels, and parking facilities.
Building them in sufficient numbers will take time and large financial resources.

Figure 4: Rapid Motorization vs. Controlled Motorization in Urban Areas
Travel dem andTravel dem andAutomobile

Automobile
Motorcycle

Motorcycle

Public transport

Public transport

Tim e

Tim e

Scenario A- Rapid motorization- Strong restriction on motorcycles- Slow construction of transport
infrastructure

Scenario B- Controlled motorization- Gradual phase-out of motorcycles- On-time construction of transport
infrastructure

16

The need for public transport systems, such as commuter rails, subways, sky trains, andrapid bus transit, is keenly recognized in Hanoi and HCMC. Many projects are planned, andsome are already under construction. In the long run, public transport should become the mainmeans of urban and suburban mobility as in most of the advanced countries. This will greatly
reduce road congestion as car and motorcycle use is reduced. However, completing theseinfrastructure projects will also take a large amount of time and money. While very desirable,
an efficient and comprehensive UMRT system cannot be realized in the short run, and can
only be partly realized in the medium run, in Vietnam.
Figure 4 illustrates two hypothetical modal combinations in a rapidly developing country.
In Scenario A, motorcycle use is discouraged by policy while motorization proceeds rapidly
without restraint. Building of transport infrastructure, including UMRT, is assumed to be slow.
In this scenario, severe urban congestion is inevitable, and commuters are forced to spend along time in gridlocks in the absence of alternative transport means. With severe congestion,
fuel consumption rises and air quality deteriorates. This is a situation observed in many mega
cities around the world, including Bangkok in the early 1990s where one had to allow at least
two hours to get one part of the city to another. In contrast, Scenario B suggests one possible
way to avoid such a disastrous situation, by allowing motorcycles to be phased out only
gradually and building public transport sufficiently and on time. As a result, motorization
proceeds modestly, and traffic time loss and environmental damage can be minimized.
The view that motorcycle use should be curbed immediately by administrative measures
to reduce pollution, congestion and accidents is short-sighted. Suppressing travel demand bydepriving people of motorcycles, without giving them alternative transport modes, can beconsidered a policy failure. Traffic demand is predictable, and there should be a long-term
strategy to respond to it well in advance. Both Hanoi and HCMC have drafted urban masterplans 6 which aim to provide public transport services for about 30-50% of total travel
demand by 2020, as compared with less than 10% today. These goals are highly consistent
with the policy direction of this master plan. Motorcycles should be the principal mode ofurban transport in Hanoi and HCMC until new public transport systems are introduced,
step-by-step, to replace them. Moreover, this transport strategy must be accompanied byanother set of policies to deal effectively with the problems associated with continued
motorcycle use, as explained below.
2.5. Policy Direction
Policy that affects the use and production of motorcycles should be designed from a
broad perspective, which includes the life style and life quality of the people, urban and trafficplanning, and industrial promotion. Motorcycle policy should be consistent with, andconstitute an integral part of, an overall transportation master plan as well as an overall
industrial master plan. For this purpose, all related ministries and organizations should have6

See footnote 1.
17

close and continuous consultation to coordinate their policies.
Motorcycle policy should pursue the following four objectives.
(i) People’s mobility and convenience--in the circumstance of rising income andincreasing travel demand, people’s mobility and convenience associated withtransportation should be ensured. At present, the residents of Hanoi and HCMC
enjoy relatively shorter commuting and more frequent trips than the residents ofother large cities in the region (chapter 5). This situation should be maintained while
modal options for non-motorcycle transport should be expanded.
(ii) Quality of life--traffic congestion, traffic accidents and air pollution associated withtransportation should be reduced for the safety, health and comfort of the people.
Even though travel demand increases, these situations should be improved, not justbe prevented from worsening, in comparison with the current situation.
(iii) Reasonable cost and timing of building transport infrastructure--Vietnam mustbuild many subways, trains, expressways, roads, bridges, tunnels, and so on.
However, the total cost of building them is enormous, and time required forplanning, financing, resident relocation and construction is substantial. Motorcycle
use should partly cover the increasing traffic need while new transport infrastructure
is being built at a reasonable and realistic speed.
(iv) Leveling-up of industrial capability--Vietnam’s motorcycle industry has reached adomestic demand size which is sufficiently large for aiming at production efficiency
and supporting industry development. With proper policy support, the motorcycle
industry should strengthen its role as a core industry for industrial agglomerationand technology improvement, with spillover effects to other industries. Capabilityof parts production should be raised with respect to quality, cost and delivery.
Industrial property rights should be protected and illegal copies should be
eliminated.
These objectives can be restated as follows: motorcycles should continue to be used toensure people’s mobility and reducing infrastructure cost per year, provided that sound andsustainable solutions are found and effectively implemented to cope with traffic congestion,
traffic accidents, environment, and industrial property rights. At the same time, the motorcycle
industry should become the principal industry by which supporting industry base is built andindigenous industrial capability is promoted.
It is noteworthy that, in the case of motorcycles, the Vietnamese government does nothave to worry about the competitiveness of major producers, since motorcycle production in
Vietnam is dominated by FDI assemblers with high technology and global reputation. The
government has to be engaged in close dialogue with them to compile and revise policies, butthere is no need to dictate their production, investment, marketing, export or R&D activities.
18

These are decided by markets as well as business strategies of individual companies. Instead,supply-side policies should be mainly directed to the promotion of supporting industries andindustrial human resources, which improves local capability and indirectly helps FDI
assemblers, and additionally to reorganize or streamline Vietnamese assemblers. Apart fromsupply-side policies, people-oriented policies to improve motorcycle use, as discussed above,are extremely important in the case of motorcycles, since motorcycles have great impact on
the general welfare of Vietnamese people.
Motorcycle industry promotion and addressing the problems associated with motorcycle
use are not contradictory. In fact, from the long-term perspective, addressing these problems
adequately is the pre-condition for the healthy growth of Vietnam’s motorcycle industry.
Industrial development and comfortable life have been achieved simultaneously in many
advanced countries. Motorcycle manufacturers should not pursue, and policy makers should
not allow, unregulated expansion of motorcycle sales at the severe social cost of increasing
deaths, injuries, and health problems of the general public. The industry can develop
sustainably and competitively only if producers accept corporate social responsibility
associated with their products and if the government adopts policies to cope with themeffectively.

19

Appendix: Registered Motorcycles and Automobiles by Province, 2005
Population
x1000-umber ofMotorcycles-umber ofAutomobiles

Motorcycles/
1000 persons

Automobiles/
1000 persons

Ha Noi *

3,145

1,565,641

163,796

498

52.1

HCMC *

5,891

2,619,525

275,160

445

46.7

Da Nang *777

315,041

17,311405

22.3

Binh Duong

915

313,002

20,775342

22.7

Dong Nai

2,193

640,143

29,913292

13.6

Quang Tri

622

178,920

5,605

288

9.0

Ba Ria-Vung Tau

913

253,990

13,640278

14.9Khanh Hoa

1,123

301,272

12,900268

11.5

Can Tho *1,135

268,001

9,722

236

8.6

Tay Ninh

1,039

242,062

7,593

233

7.3

Hai Phong *1,793

409,229

5,352

228

3.0

Lam Dong

1,161

252,009

8,996

217

7.7

Tien Giang

1,701

357,664

9,026

210

5.3

Phu Yen861

180,187

3,892

209

4.5

Thai Nguyen

1,109

222,809

9,352

201

8.4

Thua Thien-Hue

1,136

222,797

7,972

196

7.0

Dak Lak

1,711

329,385

10,994193

6.4

Binh Thuan

1,151

220,155

5,587

191

4.9

Ninh Thuan

562

105,737

2,922

188

5.2

Quang Ngai

1,269

237,587

6,180

187

4.9

Binh Dinh

1,557

283,446

12,417182

8.0

An Giang

2,194

393,462

5,541

179

2.5

Gia Lai

1,115

198,743

12,612

178

11.3

Long An

1,413

243,945

5,638

173

4.0

Quang Ninh

1,079

180,049

16,991

167

15.7

Quang Nam

1,463

240,007

8,396

164

5.7

Dong Thap

1,655

268,252

4,560

162

2.8

Ving Long

1,055

170,386

4,364

161

4.1

Ben Tre1,352

217,577

2,166

161

1.6

Hai Duong

1,711

271,244

16,352

158

9.6

Kon Tum

375

56,790

2,299

151

6.1

Binh Phuoc

796

118,980

5,181

149

6.5

Phu Tho

1,328

196,855

11,644148

8.8

Bac Ninh

998

147,935

4,883

148

4.9

Vinh Phuc

1,169

166,740

7,679

143

6.6

City or Province

20

Tuyen Quang

727

103,232

3,252

142

4.5

Tra Vinh

1,028

145,205

2,807

141

2.7

Nam Dinh

1,961

270,991

6,508

138

3.3

Bac Giang

1,582

217,321

4,974

137

3.1

Ninh Binh

919

125,595

5,316

137

5.8

Bac Lieu

798

104,795

2,866

131

3.6

Ha Tay2,526

325,896

15,786129

6.3

Yen Bai

732

94,275

2,796

129

3.8

Lang Son

739

94,971

4,678

128

6.3

Dak Nong

398

50,435

4,544

127

11.4

Quang Binh

842

106,472

3,807

126

4.5

Lao Cai

576

72,644

3,617

126

6.3

Hung Yen

1,134

140,647

4,165

124

3.7

Thai Binh

1,861

230,223

4,443

124

2.4

Bac Kan

299

36,611

1,692

122

5.7

Kien Giang

1,655

199,828

5,660

121

3.4

Nghe An

3,042

360,325

13,596118

4.5

Cao Bang

515

58,652

3,864

114

7.5

Soc Trang

1,272

142,964

3,436

112

2.7

Ha Tinh

1,301

138,697

7,608

107

5.8

Son La989

103,385

4,532

105

4.6

Hoa Binh

813

83,231

3,701

102

4.6

Thanh Hoa

3,677

367,736

12,418100

3.4

Dien Bien

450

44,875

2,421

100

5.4

Ha Nam823

74,007

5,265

90

6.4

Ca Mau1,219

84,498

2,671

69

2.2

Ha Giang

673

45,297

2,578

67

3.8

Hau Giang

791

27,733

648

35

0.8

Lai Chau

314

10,958

805

35

2.6

Total or average

83,120

16,251,066

887,865

196

10.7

Note: The asterisk (*) shows five cities under central administration.

Source: National Traffic Safety Committee

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