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Jan 09, 2020 / 12:34

Vietnam named most promising Asian investment destination in 2020 for Japanese firms

Vietnam's potential as a growing market, large supply of skilled and low-cost labor are key factors attractive to Japanese firms.

Vietnam has been regarded by Japanese firms as the most promising place in Asia to invest in 2020, with India and Southeast Asian countries dominating other top spots, a survey showed Wednesday.

 Illustrative photo.

Other respondents of the survey, targeting expatriates working for Japanese firms in Asia, attributed their choice to the country's proximity to China.In the survey, conducted online from November to December 2019 by NNA Japan Co., a Kyodo News group company, Vietnam received 42.1% of the 820 valid responses, based on factors such as its potential as a growing market and large supply of skilled, low-cost labor.

India ranked second with 12.2% of the vote, with expectations for its growing market and its potential as a doorway to the Middle East and Africa among the reasons cited.

Myanmar jumped three spots from the previous year to the third place, while Indonesia took the fourthn spot.

China, which appears to have lost its appeal somewhat as an investment location due to concerns about its trade war with the US and rising labor costs, ranked fifth.

At the Vietnam M&A Forum 2019 held last August, Tamotsu Majima, senior director of Japan's leading M&A advisory service company RECOF Corporation, said that the number of transactions by Japanese enterprises in Vietnam had reached a record high number. In the past four years, there were about 20-25 transactions each year, but the figure hit 21 transaction alone last July.

Majima added Japanese companies were increasingly interested in Vietnam, especially in the fields of production and services, partly because the two economies are becoming closer. In recent years, more and more Vietnamese people travel to Japan and vice versa. Besides, Vietnamese people have also taken part in Japanese economic activities, while the Japanese are getting used to employing Vietnamese workers.

Masataka Sam Yoshida, RECOF's senior managing director, added the US – China trade war is one of the main reasons for Japanese investors to turn to Vietnam.

Besides, Vietnam’s high economic growth also attracts more Japanese enterprises to invest in the fields of consumption, goods and many other industries. Yoshida referred to some notable deals, such as Taisho Pharmaceutical with local DHG Pharmaceutical, Misui Corp buying stake at Minh Phu seafood, or Sumitomo looking for Gemadept’s shares, among others.

Yoshida expected the Japanese economy to slow down in the coming years, but this would not be the case with Japanese investments in Vietnam. Under fierce competition from countries such as South Korea, Thailand and Singapore, Japanese enterprises will continue to invest in the fields of consumer goods, health, real estate, construction, logistics, and finance in Vietnam.