VietNamNet Bridge - Though appreciating Japanese support to Vietnam’s industries, economists say that Japanese automobile manufacturers’ claims for investment incentives are unreasonable.

At a Vietnam-Japan cooperation forum, Japanese enterprises proposed to have more investment incentives to stay in Vietnam instead of leaving for other regional countries. 

Meanwhile, Vietnamese economists said that these are excessive claims, and that incentives should not be given just to develop assembling-based industries in Vietnam.

“Automobile industry is a typical example for the unsuccessful cooperation between Vietnam and Japan. Vietnam failed to develop the automobile industry despite a lot of preferences offered to manufacturers. Should Vietnam still try to make cars?” Vo Tri Thanh from CIEM said. 

The renowned economist pointed out that Vietnam and Japan have been very successful in developing the motorbike industry. Japanese brands cannot be replaced in the Vietnamese market. However, Vietnam has failed in the automobile industry. 

Though appreciating Japanese support to Vietnam’s industries, economists say that Japanese automobile manufacturers’ claims for investment incentives are unreasonable.

Analyzing the failure, Thanh blamed the wrong policies.

“Japan does not consider Vietnam a key market. The technology transfer is limited,” he said.

Pham Chi Lan, a respected economist, commented that new automobile products are introduced globally, while products in Vietnam are still old models.

“What if we continue offering incentives? Will the old models still be used after 15-20 years?” she asked.

She commented that Japanese enterprises, from the beginning, chose Thailand, Indonesia and China, so is necessary to think about whether to continue offering incentives to attract investments.

Recalling the claims worth a total of $2 billion made by Toyota two years ago to the Vietnamese government in exchange for its stay in Vietnam, she questioned the high price, as Toyota only does assembling and does not transfer technology to Vietnam.

“Why should we give incentives to enterprises which bring components and accessories from Thailand and Malaysia to Vietnam to assemble domestically?” she asked. 

Lan went on to say that instead of giving incentives worth $2 billion to foreign enterprises, it would be better to reserve $1 billion for Vietnamese enterprises to help them improve production capability and join global value chains.

“Vietnam followed the wrong development strategy. Vietnam wants ‘made in Vietnam’ cars, but it only has an ‘assembling industry’ and that’s all,” she said.

Nearly all well-known car brands are present in Vietnam. Deputy Minister of Industry and Trade Do Thang Hai commented that Vietnam, with nearly 100 million people and increasingly high GDP per capita and more middle-class income earners, is a promising market for any automobile manufacturer.

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