Japanese businesses view the Vietnamese market an attractive investment destination in the medium and long run, according to Toru Aguin, chief representative of Japan Bank for International Cooperation (JBIC) in Vietnam.
|Japanese enterprises are redirecting investment into Vietnam. (Photo: congthuong.vn)|
JBIC has recently conducted a survey on the investment environment in 2021 involving the participation of 515 Japanese enterprises currently investing in the country. Survey results indicate that the nation has ranked fourth among ASEAN member states for three consecutive years.
Aguin said his organization will organise a seminar to highlight research on Japanese business’ expectations of the country’s high-quality foreign investment attraction policy aimed at supporting Japanese investment in the nation moving forward.
According to the Japan External Trade Organization (JETRO), despite the country being heavily affected by the COVID-19 pandemic in 2021, Japanese businesses remain highly optimistic about the local investment and business environment in the Southeast Asian nation in 2021 and in the year ahead.
The proportion of Japanese enterprises set to expand their business over the next one to two years in Vietnam has reached 55.3%, thereby ranking first within the ASEAN region.
Furthermore, Japanese businesses also highly appreciate the Vietnamese investment environment thanks to its advantages in market capabilities, its huge potential for economic development through international economic integration, and general political and social stability.
Data released by the Ministry of Planning and Investment recently indicates that up to now, 140 countries and territories have invested in the Vietnamese market, of which Japan is the third largest investor. Indeed, the Far East country is behind the Republic of Korea (RoK) and Singapore with a total registered capital of US$63.96 billion, while the RoK and Singapore poured US$77.3 billion and US$65.2 billion into Vietnam, respectively.
The opening months of the year have seen Japanese enterprises invest in nine new projects locally.
According to details given by the Ministry of Planning and Investment, Japan’s FDI into Vietnam is highly appreciated for its overall quality and implementation efficiency. Most notably, the appearance of many leading Japanese brands in the country such as Honda, Toyota, and Canon also contributes to promoting the development of Vietnamese enterprises. Currently, Japanese FDI mainly focus on processing and manufacturing industries, thereby accounting for 65.3% of total registered capital.
However, according to Takeo Nakajama, chief representative of JETRO Office in Hanoi, FDI inflows from the Far East country into the Vietnamese market over recent times have begun to be adjusted. This has involved the participation of many projects in the field of retail and services targeting the nation’s domestic and export market in order to take advantage of opportunities from free trade agreements (FTAs) that Vietnam has joined.
As a way of incentivising Japanese small and medium enterprises to invest in the nation, Aguin also said that over the years, JBIC has provided many loans to promote Japanese direct investment capital flows into the country.
JBIC also said that it continues to encourage Japanese small and medium enterprises to invest, expand production and business in the country, outlining its hopes that Vietnamese investment incentive policies will become increasingly favourable. This will serve to create the best possible conditions for Japanese businesses to operate in the nation.
Meanwhile, JETRO also informed that it has and will implement a wide range of practical activities aimed at facilitating Japanese investment in the Vietnamese market.
With regard to the Vietnamese side, in order to create favourable conditions for foreign investors, as well as for Japanese investors in the context of the complicated development of the COVID-19 pandemic, the Vietnamese Government has issued many solutions to help businesses overcome difficulties. These contribute to dealing with issues caused by the impact of the pandemic and improving the overall investment environment towards transparency and convenience.
Most notably, according to Deputy Minister of Planning and Investment Nguyen Thi Bich Ngoc, the Ministry of Planning and Investment is ready to co-operate with Japanese agencies to the create optimal conditions aimed at removing difficulties and obstacles in terms of the investment environment in order to attract greater Japanese investment into the country.
Low labour costs, a geographical location close to Asian supply chains, and Japan and the Republic of Korea (RoK)’s efforts to promote greater overseas investment are considered as three factors in boosting Vietnamese foreign direct investment (FDI).
Despite facing various difficulties, it remains entirely possible to be optimistic about the outlook for foreign investment attraction moving into 2022, with many commitments regarding investment in major projects being made by foreign investors.