VietNamNet Bridge - Official reports show a decrease in the Japanese foreign direct investment in Vietnam in recent months. Some analysts have warned the downward tendency would continue.

A rubber component manufacturing enterprise in Dong Nai Province has scaled down its production since Tet. The representative of the enterprise said more than 50 percent of workers have not come back to work after Tet holiday, but this has not affected the production line.

“The total value of the orders placed by the Japanese partners in Vietnam this year is just half of that of last year,” he explained.

In 2011, Vietnamese Ambassador to Japan Doan Xuan Hung, at an year-end meeting, said he had high expectations for Vietnam-Japan cooperation in many business fields.

Billions of dollars worth of investment were registered by Japanese investors within the second half of the year. More investment capital was poured into Vietnam in following years, and Japan jumped into the first position in the list of the largest foreign investors in Vietnam, with $5.9 billion worth of registered investment in 2013.

The number of investment projects and investment capital in the manufacturing sector decreased by 10 percent and 15 percent, respectively.

Nevertheless, Japan’s foreign direct investment (FDI) has been decreasing since 2014. With registered FDI capital down by 61 percent to $2.3 billion, Japan fell from the first position to the fourth.

Analysts attributed the sharp fall in Japanese FDI in Vietnam to a 25 percent yen depreciation against the greenback, which forced Japanese investors to reconsider their investment plans.

However, they noted that Japanese did not scale down their investments in all countries.

Meanwhile, a local newspaper quoted Yasuzumi Hirotaka, director of JETRO’s (Japan External Trade Organization) HCM City Office, as saying that many Japanese businesses left Vietnam for other regional markets such as Myanmar, the Philippines, Thailand, Indonesia and Cambodia.

Japanese businesses reconsidered their investment strategies in Vietnam after realizing that profits made in 2014 in Vietnam were lower than in other countries.

A report showed that 62 percent of Japanese investors in Vietnam reported profits, but the Japanese additional registered investment capital in the year decreased by 81 percent compared with the year before.

Also in 2014, only Japanese outsourced enterprises that made products for export made high profits (70 percent), while enterprises in other sectors reported a loss of 56 percent.

Meanwhile, some Japanese invested enterprises in Amata Industrial Zone revealed that the profits the Japanese enterprises made in the Philippines, Thailand, Malaysia and China in the year were higher than in Vietnam.

Japan is still the second largest foreign investor in Vietnam, based on registered investment capital.

TBNH