A&J Building Big E-Bike Facility in Vietnam
LUDHIANA, India – At ‘CFOSE 2018’, the Indian bicycle show that took place last week in Ludhiana, A&J ENT. Co. announced that it is building a 600,000 unit plant in Vietnam which is to focus on the production of e-bikes. The company also operates a facility in nearby Cambodia which is targeted to the production of regular bicycles. The European Union is about to enter into a Free Trade Agreement with Vietnam.
A&J’s new Vietnam facility is under construction at Phuoc Dong, in the Tay Ninh Province of Vietnam, stated Jon Edwards, CEO, A&J ENT. Co., Ltd at the bike show in Ludhiana, India last week.
Production start 2nd half 2018
Edwards also mentioned that A&J’s new Vietnam facility will have an installed production capacity of 600,000 units annually and is planned to commence production in the second half of 2018. Almost 80% of the construction is completed while factory equipment installation is underway. Edwards declined to comment on investment details.
Strengthening Far East production base
That A&J is strengthening its production base in the Far East is of course related to import duty benefits the European Union is granting Cambodia under the GSP+ regulations. This means that Cambodia can export duty free regular bicycles to the EU markets which saves 14% import duty. However, there are derogation rules being applied to the GSP+ status of Cambodia that end December 31, 2018.
Questions on huge capacity
That A&J could be taking into account that the GSP+ import duty free status of its bicycle export to the EU could end by the start of 2019, is reflected in the huge 600,000 units production capacity of its new Vietnam facility. The company is of course hoping that it will be able to benefit from the European Union’s Free Trade Agreement with Vietnam (EVFTA) which is expected to be signed coming summer. It is to eliminate all of EU’s import taxes on Vietnamese goods within seven years. Currently the EU import tax on e-bike stands at 6%.
Latest news on EVFTA however says that this agreement is under threat. It is running into difficulties as the European Parliament is placing questions at how Vietnam as a one-party Communistic state is treating its workers.