return icon

Japanese investment in Vietnam on the rise in 2019

Japanese investment in Vietnam is expected to grow this year, given Japan’s recent initiative to shift investment to Vietnam and other Mekong River nations, as well as free trade agreements (FTA), experts said.



Japanese investment in Vietnam is expected to grow this year, given Japan’s recent initiative to shift investment to Vietnam and other Mekong River nations as well as free trade agreements



According to Hironobu Kitagawa, chief representative of the Japanese External Trade Organization (JETRO) in Hanoi, the Vietnamese market will remain attractive to Japanese investors in 2019. Japan was the largest investor in Vietnam last year with registered capital of nearly 8 billion USD.

“Currently, many Japanese investors are coming to Vietnam to seek business opportunities and I expect Japan and Vietnam will maintain good business ties,” Kitagawa told Vietnam News.

“Competitive human resources, economic and market growth, and a dynamic society are considered factors that make Vietnam an attractive destination for Japanese firms to develop their business in the future,” Kitagawa said, noting Japanese investors can promote the advantages, given by Vietnam’s expanding economic ties with many other countries across the world thanks to its active participation in FTAs such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Kitagawa said a JETRO recent survey on investment trends among Japanese firms operating in Vietnam in the 2018 fiscal year showed nearly 70 percent of Japanese businesses want to expand operations in Vietnam after gaining good business performance last year. A total of 65.3 percent of the 723 Japanese companies recorded high profits in Vietnam in 2018, according to the survey.

The majority of these companies said the market scale and growth are the greatest advantages of Vietnam’s investment environment. Other positive factors include low labour cost and political stability.

“Vietnam ranked fourth in political and social stability, and cheap labour cost while its market size and growth took the sixth position in the ASEAN, Southwest Asia and Oceania regions,” Kitagawa cited the survey as saying.

Besides, experts forecast the Japanese investment inflow to Vietnam would benefit from a Japan Chamber of Commerce and Industry initiative to shift Japanese investment to Vietnam and other Mekong River nations with an aim to enhance economic partnerships between the two sides.

“Japan's initiative to move its investments to the Mekong region nations will likely see Vietnam receive a significant slice of the pie, particularly if these investments are in lower-end manufacturing,” Jason Yek, country risk analyst of Fitch Group’s Fitch Solutions, told Vietnam News.

Yek explained China accounts for 11.6 percent of Japan's total outbound FDI in 2017 as compared to just 2.1 percent for Vietnam. Given the Chinese government's goal of moving the Chinese economy away from low-end manufacturing and the rising labour costs in China, this will likely see much of these Japanese direct investments shift to countries like Vietnam, which boasts a relatively cheap and educated labour force alongside a large and growing working class population.

However, instead of just focusing on manufacturing, Kitagawa forecast Japanese investment inflow to Vietnam’s non-manufacturing industries would keep rising in 2019 and in the next few years.

“Japanese investment in Vietnam’s non-manufacturing industries, such as retail, wholesale, IT, professional support and education, will continue to increase, fuelled by the rising growth of Vietnam’s consumption market,” Kitagawa said.

Non-manufacturing industry accounted for about 70 percent of Japan’s total investment capital in Vietnam in recent years. Especially, the growth rate of the industry was higher than that of the manufacturing.

According to experts, the shift of this investment capital flow is aimed to catch up with huge opportunities from the CPTPP and the Regional Comprehensive Economic Partnership (RCEP).

Vietnam, which is considered one of the attractive consumption markets in the region with a population of some 100 million people, is luring foreign investors, including Japanese. Like China 10 years ago, incomes of Vietnamese consumers are getting higher and they are also spending more for consumption.

According to Kitagawa, Vietnam's business environment is relatively good compared to other countries in the ASEAN region.

However, to further attract Japanese investors to Vietnam, he noted the JETRO's survey showed it was important for Vietnam to streamline the country’s legal system as it remained inadequate and less transparent.

According to the survey, local authorities still lack prior research on legal content and delay in issuing documents to guide the implementation of laws, which cause adverse impacts on investors’ works and an inconsistency in the laws and execution.

In addition, Vietnam’s tax regime, such as personal income tax, transfer pricing and value added tax (VAT) invoice, remains complicated and inconsistent.

Besides, Kitagawa suggested the Vietnamese Government should further promote existing plans, such as the Japan-Vietnam Joint Initiative and the Vietnam Business Forum, which would enable it to continuously listen to the opinions of Japanese businesses with an aim to improve the country’s business environment.

“In addition, the implementation of investment promotion seminars with careful and effective preparation on Vietnam's investment environment-related documents should be also enhanced to facilitate investors in seeking information on investment and business opportunities in the country,” Kitagawa said.


Vietnam to hold first cat fish festival soon

Vietnam’s first cat fish festival is scheduled to take place in the southern province of Dong Thap on December 16-17.

Control of bad content on social networks should be tightened

Tik Toker No O No, who criticized the poor, was boycotted by the community and forced to shut down by the authorities. He is not the first Tik Toker that has posted bad content on social networks.

Businesses struggle to keep workers as exports slow

Businesses have been struggling to maintain and support their workers as the Lunar New Year approaches.

Only in Vietnam: Shrimp-chip straws, dragon-fruit noodles

VietNamNet sums up the “odd news” in Vietnam last week.

Vietnam in need of more village-based midwives

Vietnam is in need of village-based midwives as the country has more than 7,000 remote and disadvantaged villages where women do not regularly get antenatal care at medical facilities.

Fuel supply estimated to surge 10-15% in 2023

The Ministry of Industry and Trade has drawn up two scenarios for the minimum fuel supply in 2023, requiring key fuel enterprises to increase the overall figure by 10-15% in 2023, according to the local media.

Da Nang to hire more IT staff to meet digital transformation goals

In the 2022-2025 period, Da Nang needs at least 7,500 more information technology (IT) workers a year and in the 2026-2030 period, the figure is 8,000.

Ho Chi Minh City looks to cash in on new travel trends

Ho Chi Minh City expects to fully exploit bleisure travel - a novel type of tourism combining business travel with leisure time.

A special English class in Hanoi for the older generation

For the past four years, a special English class has been held in Hai Ba Trung District in Hanoi for students 60 to 90 years old.


Strong economic growth creates platform for M&A market


Hanoi Tourism Ao Dai Festival 2022 opens

Use of e-cigarettes by youth rockets with easy availability at shops

Many students and young people have been hospitalized in a deep coma after using e-cigarettes, which are easy to buy.

How will telecom carriers fare in a highly competitive market?

The traditional telecom market is getting saturated and facing upheavals, including a drop in revenue from traditional calls and SMS, a tighter management policy and changes in technology.

Number of international visitors to Vietnam sets 'record' after pandemic

Vietnam welcomed 2.95 million foreign visitors in January-November 2022, 21.1 times up year on year, but still down 81.9% compared with pre-pandemic levels in 2019.

Su-30MK2, Mi helicopters rehearse in Hanoi

On December 2, Su-30MK2 fighters performed in a rehearsal to prepare for the upcoming Vietnam International Defense Exhibition 2022.