Will foreign investors leave because the domestic market is too small?
Some foreign investors have warned that they may leave Vietnam because of unfavorable conditions to do business. However, Vietnamese businesses and analysts believe they will stay in the country.
Deputy chair of the Vietnam Association of Mechanical Industry (VAMI) Dao Phan Long said foreign automobile manufacturers continue complaining about the unattractive Vietnamese automobile market, but the story behind this is different.
Long at a workshop recently held by CIEM told a story about how he responded to the representative of a foreign automobile manufacturer which threatened to leave Vietnam if Vietnam continues applying unreasonable policies.
According to Long, Vietnam is becoming more attractive to automobile manufacturers. With the Hanoi – Haiphong and other highways put into operation, the road system in the north and south has been improved in the first phase.
“The developed transport system and the 100 million consumers make Vietnam a lucrative market which would make any business rethink their withdrawal plan,” he said.
The threat was made by Pham Tuan Anh from Toyota Motor Vietnam. Anh complained that the Vietnamese automobile market was too small, while the import tariff will be gradually cut to zero percent by 2018.
Anh said the Vietnamese market was just 5-10% of Thailand’s and Indonesia’s, while the car prices in Vietnam are high because of many taxes and fees.
He went on to say that Vietnam will open its market widely to cars from ASEAN before the domestic automobile industry will be able to grow; therefore, automobile manufacturers find it hard to maintain their production in Vietnam.
“Most of the global automobile manufacturers have made their presence in ASEAN and Vietnam. They have succeeded in other countries, but not in Vietnam because of the small scale of the market,” Anh said.
Nguyen Mai, chair of the Foreign Invested Enterprises’ Association, also said he does not think Toyota would leave Vietnam.
“This is just a threat. They (Toyota) have made such announcements (on leaving Vietnam) many times,” Mai said on Dat Viet online newspaper.
The expert commented that it was not easy to relocate factories to other places.
He believes that Vietnam is still an attractive market. With nearly 100 million people and income per capita expected to reach US$3,500-4,000 per annum by 2020, Vietnam would have 15% of middle-class people who have the income of US$10,000. As such, Vietnam would have 15 million people who can afford cars.
Long at a workshop recently held by CIEM told a story about how he responded to the representative of a foreign automobile manufacturer which threatened to leave Vietnam if Vietnam continues applying unreasonable policies.
According to Long, Vietnam is becoming more attractive to automobile manufacturers. With the Hanoi – Haiphong and other highways put into operation, the road system in the north and south has been improved in the first phase.
“The developed transport system and the 100 million consumers make Vietnam a lucrative market which would make any business rethink their withdrawal plan,” he said.
The threat was made by Pham Tuan Anh from Toyota Motor Vietnam. Anh complained that the Vietnamese automobile market was too small, while the import tariff will be gradually cut to zero percent by 2018.
He went on to say that Vietnam will open its market widely to cars from ASEAN before the domestic automobile industry will be able to grow; therefore, automobile manufacturers find it hard to maintain their production in Vietnam.
“Most of the global automobile manufacturers have made their presence in ASEAN and Vietnam. They have succeeded in other countries, but not in Vietnam because of the small scale of the market,” Anh said.
Nguyen Mai, chair of the Foreign Invested Enterprises’ Association, also said he does not think Toyota would leave Vietnam.
“This is just a threat. They (Toyota) have made such announcements (on leaving Vietnam) many times,” Mai said on Dat Viet online newspaper.
The expert commented that it was not easy to relocate factories to other places.
He believes that Vietnam is still an attractive market. With nearly 100 million people and income per capita expected to reach US$3,500-4,000 per annum by 2020, Vietnam would have 15% of middle-class people who have the income of US$10,000. As such, Vietnam would have 15 million people who can afford cars.