Japanese automakers threaten to leave Vietnam again

Japanese automobile manufacturers have discussed the possibility of relocating their factories to regional countries because of Vietnam’s weak supporting industries.

Jetro’s (Japan External Trade Organization) Chief Representative Takimoto Koji, meeting the local press on February 14, said that some Japanese automobile manufacturers are considering leaving Vietnam because of problems in tax policies and  underdevelopment of Vietnam’s support industries.

There are four Japanese invested automobile enterprises in Vietnam, namely Toyota, Mazda, Honda and Suzuki. Jetro did not say exactly which enterprises were considering leaving Vietnam.
japanese automakers threaten to leave vietnam again hinh 0
Meanwhile, other automobile manufacturers are considering importing cars from ASEAN to sell domestically instead of maintaining production lines in Vietnam. 

Under ATIGA, Vietnam will have to cut the tariff on imports from ASEAN to 0% by 2018. The Vietnamese automobile market remains small with 250,000 cars sold a year, much lower than 2 million cars sold in Thailand. 

Meanwhile, a production line needs to churn out 200,000 products a year at least to bring profit.

While affirming that many investors wanted to invest in Vietnam’s automobile industry, Koji said the investment trend may change because the supporting industries in Vietnam have not improved. 

The enterprises making cars in Vietnam may leave for Indonesia, Thailand or Malaysia.

Supporting industries are considered the foundation for automobile manufacturing. 

This is not the first time foreign automobile manufacturers have threatened to leave Vietnam.

In April 2015, Yoshihisa Maruta, general director of Toyota Vietnam, at a meeting on reviewing the performance of the automobile joint venture, mentioned the possibility of stopping car assembling in Vietnam and shifting to importing CBU cars for domestic consumption.

The general director said that it would be less costly to import CBU cars from Thailand than assemble domestically, and that Toyota and other manufacturers hoped the government would apply measures to encourage the development of supporting industries and help stimulate demand.

In early 2016, the automobile manufacturer once again emphasized the importance of the government’s support to help the automobile industry.

Commenting about Toyota’s statement about the possible departure from Vietnam, deputy chair and secretary general of VAMI (Vietnam Association of Mechanical Industry) Dao Phan Long said Toyota took the move just to ask for more investment incentives.

Long said Vietnam's developed transport system with a series of new highways, plus a market of nearly 100 million people, is a lucrative market for any automobile manufacturer.


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