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Vietnam tops ASEAN as favorite destination for Japanese businesses: JETRO

Vietnam remains an attractive market in the eyes of investors with clear advantages such as a quality workforce and a large domestic market of high potential.

Vietnam remains the top favorite of Japanese business people among ASEAN countries, where 55.3% of them look to expand their operations in the next one to two years, up 8.5 percentage points against the previous year.

 Chief Representative of the Japan External Trade Organization (JETRO) Takeo Nakajima. Photo: Ngoc Thuy

Chief Representative of the Japan External Trade Organization (JETRO) Takeo Nakajima revealed the figures at the launch of the agency’s survey on the sentiment of Japanese firms abroad held today [January 19].

In comparison to other regional countries, Vietnam stood fourth behind India, Bangladesh, and Pakistan. “This shows the country continues to be an attractive market for Japanese investors,” Nakajima said.

Nakajima added 54.3% of Japanese businesses expected profitability in 2021, up 4.7 percentage points against the previous year, and those anticipating losses made up 28.6%, down 1.5 percentage points.

The rates remained below the ASEAN average which is 57.1% and that of the region which stood at 63%.

According to the JETRO head, the survey took place at a time when Vietnam was imposing strict restrictions, which is the reason for a more cautious assessment from respondents compared to other countries.

Nakajima also highlighted the fact that around 56.2% of Japanese firms expected improvements in business operation in 2022, significantly higher than the rate of 31.4% recorded last year.

“All these figures showed that Japanese firms are holding high hopes for the Vietnamese market,” Nakajima told The Hanoi Times.

He noted the fourth Covid-19 outbreak and subsequent strict anti-pandemic measures, though understandable, made it difficult for Japanese companies to operate, but highlighted a swift change in the Vietnamese Government’s stance in pandemic response towards safe living with the pandemic to restore business confidence.

“The temporary difficulties could not take away Vietnam’s key advantages in the eyes of investors, such as a quality workforce and large domestic market of high potential,” he said.

Despite uncertainties surrounding the Covid-19 situation this year, Nakajima expected a positive prospect for foreign direct investment (FDI) from Japan to Vietnam.

“The visit of Prime Minister Pham Minh Chinh to Japan in late 2021 has been a major boost and sent a strong signal from the Vietnamese Government to create favorable conditions for foreign businesses,” he added, noting potential fields for cooperation between the two countries include digitalization, carbon-neutral technologies, or e-commerce.

Nakajima regarded the ongoing relocation of 39 Japanese firms from China to Vietnam under the Japanese Government program to support supply chain diversification as a positive sign in time to come, with the majority operating in fields of automobile, electronics, or healthcare.

The survey was conducted by JETRO in 20 countries/territories from August 25 to September 24, 2021, including five in Northeast Asia, nine in Southeast Asia, four in Southwest Asia, and two in Oceania.

In Vietnam, over 700 Japanese enterprises took part in the survey, the largest number among 20 countries/territories, showcasing their anticipation for greater improvements of Vietnam’s business environment.