Vietnam is planning to remove the tariff it currently applies to vehicle imports from other countries in the ASEAN region by 2018. The move is designed to make it easier for consumers to buy cars but there are fears that the move could lead to an exodus of companies, including Toyota, which have established production bases in the country; that is unless the government introduces tax breaks.

Vietnam currently imposes a 50% tariff on fully built-up imported vehicles. The removal of those tariffs could mean imports from other countries in the ASEAN region undercut locally made vehicles.

A Toyota official quoted by Nikkei Asian Review said that unless the Vietnamese government introduced tax and other “advantageous measures”, withdrawal from the country was possible.

Toyota expects to hit output of 40,000 vehicles at its Vietnamese factory this year. However, Kyoichi Tanada, Toyota’s managing officer in charge of the Mekong region, is quoted as stating that, "with the tariff elimination, there will be no economic rationale to keep our production."

Toyota sold 33,000 vehicles in Vietnam last year.