VietNamNet Bridge - While many analysts fear that Japanese businesses are leaving Vietnam for more attractive markets in the region, government officials believe Vietnam remains a favorite destination for Japanese investors.

 

Japanese investment unexpectedly began decreasing in 2014 after topping the list of foreign investors in Vietnam from 2011 to 2013.  

However, government officials have denied that Japanese capital is flowing out of Vietnam. Though the Japanese investment in Vietnam has decreased, Japan is still among the four largest foreign investors in Vietnam. Its committed investment capital this year is among the top three.

Japanese capital being poured into small-, medium-sized projects

One of the reasons behind the decrease in capital is the lack of large scale projects in the manufacturing sector.

Investment promotion experts have noted that large projects require huge capital and long term investment, and their efficiency depends on market demand.

Another reason is that the Japanese yen has depreciated considerably against the US dollar. Meanwhile, the Japanese economy is still in difficulty and the global economy has not fully recovered.

However, this does not mean Japanese capital is leaving Vietnam. This only shows a decrease in newly committed investment capital in comparison with previous investment projects.

Yasuzumi Hirotaka, deputy chair of the Japanese Business Association in HCM City, at a recent meeting with HCM City leaders, said the slight decrease in Japanese investment was just transitory. 

He said the number of Japanese businesses, especially small and medium ones, contacting him out Vietnam was on the rise.

Duangdej Yuaikwarmdee, deputy director of Reed Tradex, a trade fair organizer, noted that he saw great interest paid by Japanese businesses in Vietnam, Indonesia and Thailand.

Vietnam has caught special attention from investors thanks to the improved investment environment, low labor costs and good security conditions. 

Nakajima Satoshi, Japanese General Consulate in HCM City, also said that Vietnam remained an attractive destination for Japanese businesses, and that the desire to invest in Vietnam was undiminished.

However, he noted that Japanese investors in recent years were injecting money into projects in supporting industries, and projects with small committed investment capital. 

However, the projects are important for Vietnam because they help develop supporting industries, something that the country badly needs.

Japan also is one of the biggest portfolio investors in Vietnam. A report from Stoxplus, a financial information service provider, showed that Japan ranks sixth among countries that have had merger & acquisition deals in Vietnam.

The report said Japanese investors were shifting to long-term small- and medium-scale projects, but ones that had high potential. 

TBKTSG