Japanese firms invested US$6.47 billion in Vietnam in the first half of 2018
|
This number accounts for 24.6 percent of total number of Japanese firms investing in ASEAN countries, Kadowaki said.
Hiroyuki Ishige, Chairman of the Japan External Trade Organisation (JETRO), said that the rise came after Vietnam and Japan inked 36 memoranda of understanding totaling US$21 billion last year.
According to Ishige, Vietnam’s recent reforms on administrative and customs procedures have helped address troubles for firms in goods transport and foster foreign investment activities in the trade and service sectors. He said that Japan’s investment in Vietnam has been on the rise.
A survey on the performance of Japanese businesses in Asia and Oceania, including Vietnam, conducted by JETRO also showed that driven by better performance in 2017, around 70 percent of Japanese businesses in Vietnam are planning to expand their business activities in the country to cash in on the huge growth potential.
According to JETRO, among 652 interviewed businesses, around 88 percent attributed the reason for business expansions in Vietnam to increasing revenues, while 58 percent in the non-manufacturing sector said that high growth potential was the reason behind their expansion.
In 2017, Japan topped the list of countries and territories investing in Vietnam with US$9.11 billion, accounting for 25.4 percent of total capital.
In the first six months of this year, Japan also overcame 86 countries and territories to become the largest foreign investor in Vietnam with US$6.47 billion, accounting for 31.8 percent of the total commitments in the country.
Retaining the competitive edge
According to Dato Lim Jock Hoi, secretary general of the ASEAN, Vietnam has become an attractive destination for foreign firms, including Japanese ones, and a potential market for digitalization and electronic commerce.
Vietnam has proved its position in the global economy, Hoi said, noting that the country’s economy maintains an impressive growth rate with an open business climate.
According to Hoi, Vietnam is now a member of many bilateral and multilateral free trade agreements, including those with great influence such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the European Union-Vietnam Free Trade Agreement (EVFTA).
The agreements play an important role not only in Vietnam's exports but also in attracting Japanese investors. In theory, Japanese investors looking for efficiency will produce goods and services in Vietnam for export to the markets that Vietnam has signed agreements with.
In addition, the ASEAN Secretary General noted that with a population of nearly 100 million, a low median age and a high rate of Internet users, Vietnam is a strong potential market that foreign investors in the fields of digitalisation and e-commerce are keeping an eye on.
According to experts, business performance of Japanese enterprises in Vietnam has been gradually catching up with Japanese companies which have invested in some other ASEAN countries such as Thailand, the Philippines, Malaysia or Indonesia.
However, experts recommended despite the impressive FDI inflow from Japan, Vietnam needs to change its strategies in FDI attraction to maintain its competitiveness in attracting Japanese investment.
In addition, the government should also further improve the business environment as besides strong interest in Vietnam, Japanese investors still complain about risks in doing businesses in the country.
According to the JETRO’s survey, rising labor costs remained top concern of Japanese investors, with 61.6 percent of the respondents complaining about this. The runners-up were the imperfect legal system and the inconsistent performance of legal documents, cumbersome tax procedures, complicated administrative procedures, and underdeveloped infrastructure.
