VietNamNet Bridge – Having realized about the big interests of Japanese enterprises in Vietnam as a potential investment destination, local authorities have got ready to lure the investors from the sun rise country.

The HCM City Management Board for Export Processing Zones and Industrial Zones (Hepza) has announced recently that it is considering setting up an industrial zone specifically designed for the enterprises in the supporting industries which prioritize to attract Japanese investors.

As targeting Japanese investors, Hepza said it would look for the Japanese partners, who have good finance capability and experience in industrial zone (IZ) development, to develop the above said IZ.

Meanwhile, the southern province of Ba Ria-Vung Tau thought of setting up an IZ for Japanese investors earlier. After a lot of working visits by Japanese groups of businesses in 2011, the local authorities have decided to develop an IZ specifically reserved for Japanese investors.

In the implementation of the Vietnam – Japan development strategy, the government of Vietnam has asked the Japanese side to support to build two IZs for supporting industries, one in Ba Ria-Vung Tau and the other in Hai Phong City in the north.

Therefore, the Ba Ria-Vung Tau provincial authorities have decided to send a delegation of officials and businesses to Japan to promote foreign direct investment FDI there. The delegation would learn more about the operation of the Japanese enterprises in the supporting industries, and would introduce to Japanese investors about the potentials and the advantages of the province.

Analysts have begun talking about the new Japanese wave in Vietnam after a lot of visits of Japanese investors to Vietnam in 2011. Meanwhile, Japanese partners have moved ahead by deciding to invest in IZs, such as Sojitz, Daiwa House and Kobelco Eco-Solutions would cooperate with Donafoods to develop the infrastructure items in Long Duc IZ in Dong Nai province. Meanwhile, Jesco group of Japan has also announced the capital contribution to develop the infrastructure of the Long Hau 4 IZ in Long An province. All the IZs would mainly target Japanese investors.

Prior to that, the Foreign Investment Agency, an arm of the Ministry of Planning and Investment, promised that Vietnam would set up the IZs specifically reserved for Japanese enterprises, if they want.

Vietnam continues to be one of the most attractive destinations for Japanese investors, according to the latest surveys. A Jetro (Japan External Trade Organization) report on Japanese outward investment has affirmed that a high percentage of Japanese enterprises in processing industries choose Vietnam for their investment plans. Meanwhile, Nikkei has said that Vietnam has been the first place chosen by Japanese manufacturers for setting up production bases, followed by India and Thailand.

Investment consultancy firms have also said that Japan hopes to concentrate investment projects in specific IZs, including the IZs designed for small and medium enterprises which only need small areas of land.

However, the new Japanese investment wave has raised a new worry that a new race among local authorities to attract Japanese investors may be triggered. In order to lure Japanese investors, local authorities may offer overly high investment incentives, which would spoil the economic development plans in localities.

Experts have urged state management agencies to set up an overall plan to receive FDI from Japan, reminding that in the past, as local authorities tried to attract FDI, they offered too many incentives, which has resulted in many bad consequences. They said that it would be a “disaster” if all localities want to set up IZs to lure Japanese enterprises.

To date, Japan has 1670 investment projects in Vietnam with the total registered capital of 23.6 billion dollars.

Source: TBKTSG