Japanese enterprises accelerate investment in Vietnam
At the meeting with the Ministry of Planning and Investment and Nakajima Takeo, chief representative of the Japan External Trade Organization (JETRO), said that Japanese enterprises could not ignore Vietnam when looking around Asia for a destination to invest.
Nakajima cited the survey results of Japanese enterprises investing abroad in the fiscal year 2022. In particular, the proportion of enterprises forecasted to be profitable in doing business in Vietnam in 2022 is 59.5 per cent, up 5.2 per cent compared to the previous year. Meanwhile, up to 53.6 per cent of surveyed enterprises answered they had improved their business profit prospects in 2023 compared to the last year.
"The business profit outlook of Japanese enterprises in Vietnam has recovered strongly after the pandemic," said Nakajima.
Besides this, 60 per cent of Japanese enterprises said they planned to expand their investment in Vietnam in the next one to two years, up 4.7 per cent compared to the previous year and marking the highest among Southeast Asian countries.
“Many Japanese businesses in Vietnam expect the potential to increase revenue thanks to market expansion and export growth. Japanese enterprises also want to expand the production of high-value-added products in Vietnam," said Nakajima.
Nakajima mentioned another survey by JETRO that showed the attractiveness of Vietnam's investment market ranks second after the US Japanese companies.
The above survey results seem to reflect the current trend of Japanese enterprises in Vietnam. Early this month,Thua Thien-Hue People's Committee of Thua Thien - Hue province issued a plan to hold the groundbreaking ceremony of the AEON Mall Hue project, which is expected to be on February 11, 2023. With the total investment of more than about $170 million, this will be AEON's large-scale commercial centre in Vietnam.
In addition, Nakajima highlighted that the $35-million Fujikin Danang Research, Development and Manufacture Centre, funded by Fujikin Incorporated from Japan, was inaugurated in Danang in November 2022.
However, the chief representative of JETRO pointed out some key obstacles for Japan to invest in Vietnam, such as administrative procedures, salary increase problems, input costs, and transport costs.
“These issues may prevent Japanese businesses from making new investments or continuing to do business in Vietnam. We hope that the government works to solve the issues”, said Nakajima.
Accordingly, Minister Dung said it was necessary to clarify the issues mentioned by Nakajima. Regarding administrative procedures, it needs to identify IF the problem lies in legal regulations or implementation. Even with the increase in input costs, it is also necessary to clarify which items are managed by the state, and which are due to market supply and demand.
The minister suggested that the Japanese side needs to strengthen support for Vietnamese enterprises to improve their capacity because this will help improve the localisation rate, and the rate of on-site purchase of Japanese enterprises.
Dung and Nakajima expect that Japan’s investment in Vietnam will increase in the time to come, especially in 2023 as the two countries mark the 50th anniversary of diplomatic relations.
