Information technology is the most popular field of investment for Vietnamese companies in Japan.


 

According to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, Japan is nowhere near the top choice for Vietnamese companies when making an investment, ranking 45th out of 68 countries, with 35 projects and a combined investment of $6.6 million. 

However, while outbound investment to traditional destinations prioritises natural resources exploitation and agriculture, Vietnamese investment in Japan centres around science and technology, with a focus on IT. 

“The number of projects is not high and their scale is small but the projects are very profitable, especially in IT and software development. They produce high added value and contribute to increasing the skill of Vietnamese IT professionals,” said FIA in a report presented on July 5 at the event held by Japan External Trade Organisation (JETRO) to promote investment in Japan.

The agency said that Vietnam had a lot of advantages in providing IT services to Japan, including a large base of young, skilled and creative engineers who have good foreign language proficiency. Especially in the field of IT, the number of university graduates is on the rise, offering a workforce at regionally competitive wage levels. Moreover, there are more and more Vietnamese students going to school or doing research in Japan: as of now their number has reached 15,000 and is poised to grow steadily in the future.
 

In 2013, Vietnam became Japan’s second largest partner in software outsourcing, following China. 

Cumulative outbound Vietnamese investment as of the end of May stood at $20.24 billion, of which the top ten countries account for $18.01 billion. Laos ranked first with $5.11 billion, followed by Russia with $2.93 billion, and Cambodia with $2.86 billion. Other countries in the top ten are Venezuela, Peru, Algeria, Malaysia, Myanmar, the US, and Tanzania.

Do Nhat Hoang - Director of the Foreign Investment Agency
 
Recently 40 Vietnamese companies and I joined a trip with the prime minister to Japan. We found that Japanese companies really want to cooperate with Vietnamese companies, to transfer technologies and train the human resources of Vietnamese companies.

So the FIA and JETRO are discussing the most effective way to cooperate in order to take advantage of the trade pacts that Vietnam recently signed, and so that Vietnamese companies can learn from Japanese companies.

Shigeki Maeda - Executive vice president of JETRO
 
The Japanese government wants to turn Japan into a smart society that widely uses information technology by 2020. At the moment, the demand for IT engineers in Japan is very high and has far outgrew local supply.

Japan, therefore, has high expectations of its cooperation with Vietnam, especially in IT. Many Vietnamese engineers and students are studying Japanese so Vietnam has a lot of advantages when it comes to cooperating with Japan in IT.

Nguyen Ich Vinh - CEO of Tinh Van Outsourcing

The high demand for IT outsourcing presents great opportunities for Vietnamese companies, as Vietnam has a large and spectacularly young workforce at a competitive cost and similarities in culture with Japan.

However, Vietnamese companies may find it difficult to reach Japanese standards. They also have low Japanese skill, and market research is costly due to high transportation costs.

Nguyen Doan Hung - Deputy chairman of the Vietnam Software Association (VINASA)

Vietnamese TI investment in  Japan started 15 years ago, with FPT. However, in the past two years many younger companies have been increasing their presence in Japan and they are targeting to further expand.

Now is the perfect time for Vietnamese companies to invest in IT in Japan and establish overseas offices in order to be constantly near the fire.

At the moment, investments are relatively low because the cost of doing business in Japan is high and Vietnamese companies have little connection with big companies in Japan. However, they have to start now in order to seize opportunities in the next five or ten years.
VIR