Private Japanese firms are boosting their investment in Vietnam with support from their government’s official development assistance for Vietnam.

ODA programmes from the Japan International Cooperation Agency have attracted Japan’s investment into Vietnam

Fujita Yasuo, chief representative of the Vietnam Office of Japan International Cooperation Agency (JICA), which is in charge of implementing official development assistance (ODA) for Japan’s government, told VIR that there has been an increasing number of private Japanese firms in Vietnam who are “especially interested in” joining projects funded by Japanese ODA in Vietnam.

“The firms will act as contractors for the projects via contracts inked with investors,” Yasuo said. “In other cases, they can use JICA’s studies or surveys to independently deploy their own projects.”

Since 2012, JICA has been implementing a programme on disseminating technologies from Japanese  small- and medium-sized enterprises to developing nations, including Vietnam.

Within this project, Japan’s Tamada Co., Ltd., for example, has locally manufactured underground SF tanks – double-walled tanks which can replace less sturdy tanks at petrol stations.

The SF tank consists of an inner steel wall and an outer fibre-reinforced plastic (FRP) wall. The FRP layer protects the tank from corrosion. The tank is also equipped with sensors to detect potential leakage. These features will prevent leaks and fire hazards as well as soil and well water contamination.

Idemitsu Q8 Petroleum LLC – the joint venture between Japan’s Idemitsu Kosan Co., Ltd. and Kuwait Petroleum International Ltd. – will install Tamada’s tanks at their stations.

“These tanks will also be used by many other petrol stations in Vietnam in the time to come,” Yasuo said.

According to JICA, in the first half of the fiscal year 2017, which lasts from April 2017 to March 31, 2018, 14 projects by Japanese private firms benefiting from Japan’s ODA were completed, and another 36 projects are now being implemented.

JICA will continue raising its support for Vietnam’s agricultural sector through a variety of projects invested by Japanese firms.

For example, Kato Group is co-operating with the south-central province of Binh Dinh in a $771,000 project to catch tuna in the East Sea, which will last until June 2020. Meanwhile, Shudensha Company is implementing a 2015-2020 $820,000 project to improve the water quality in fisheries.

Nikko Foods Company has also been deploying a project in the Central Highlands province of Lam Dong for $820,000, to develop high-quality tomatoes.

According to JICA, in the first half of the fiscal year, Japan’s government has provided Vietnam with JPY61.8 billion ($547.55 million) in ODA loans – JPY51.2 billion  ($453.63 million) of which has already been disbursed, and a grant aid sum of JPY1.8 billion ($15.95 million).

Japan’s Ambassador to Vietnam Umeda Kunio told VIR in a recent interview, “Over the past three years, foreign direct investment (FDI) from Japan has continued to increase in terms of the number of projects, although we’ve noticed that FDI from Japan in terms of FDI capital remains almost the same.

“FDI from Japan has been diversifying. While most Japanese firms entering Vietnam have still been focusing on export-oriented manufacturing which benefits from Vietnam’s abundant, cheap, and quality labour, some Japanese firms are more focused on the expanding domestic market in Vietnam – such as the retail sector – along with its strong economic growth,” Kunio said.

As of September 20, Japan has become Vietnam’s second-largest foreign investor, with 3,523 valid investment projects registered at $46.15 billion. New investment from Japan, including newly-registered, newly-added, and stake acquisitions, from January-September 20, was $5.9 billion.

VIR