Vietnam has numerous advantages that could attract more foreign direct investments (FDI) from Japan in the future, according to experts.

Sato Motonobu, Chairman of the Association of Japanese Investors in Vietnam, said Vietnam has great advantages in attracting FDI from Japan in compare with other countries, reported Government portal

The advantages include political stability, similar culture and religion, and a potential market along with a young labour force, he said.

Atsusuke Kawada, Chief Representative of the Japan External Trade Promotion Organisation (JETRO), said 30 percent of Japanese enterprises having overseas investments have considered Vietnam as one of the leading choices. In Jetro's report released in February, Vietnam became the first priority investment destination for Japanese businesses, he said.

Meanwhile, 70 percent of existing Japanese investors in Vietnam are planning to expand their business this year, he said.

However, experts said Vietnam has still faced challenges in attracting more FDI from Japan.

Japanese investors said the Vietnamese business environment still had a lack of synchronous policies, complicated administrative procedures and high tax and fees.

Motonobu Sato said Vietnam didn't have enough managers in both quantity and quality. The country has also faced with poor infrastructure and unstable power generation sources.

Yasuaki Tanizaki, Ambassador of Japan to Vietnam, said that to attract stable investment from Japan in the long term, Vietnam should have administration reforms, complete its infrastructure projects and improve human resources.

Minister of Planning and Investment Bui Quang Vinh said if Vietnam does not improve its investment environment, Japanese FDI will go to regional countries around Vietnam, including Indonesia, Myanmar, Laos and Cambodia.

Vinh said the Government and provinces/cities of Vietnam must find solutions to attract and support foreign investors in all fields, especially administration reforms and reduction of taxes.

Vietnam expected Japanese investors to have a regular exchange of views on investment activities with the Government. This would ensure that the Government has timely solutions in solving difficulties of investors, Vinh said.

Vietnam expects Japanese enterprises to promote the transfer of technology to firms here and also encourages Japanese investors to invest in the farming sector.

Recently, Tokyo Bank of Japan has proposed preferential interest rates for Japanese investors when they invest in the farming sector in Vietnam.

The Ministry of Planning and Investment's report said Japan was the largest foreign direct investor for 2012 and 2013.

In the first half of this year, FDI from Japan to Vietnam was more than 800 million USD, lower than the same period of last year due to weaker yen. Japan has largest FDI volume in Vietnam with 2,300 projects and a total registered capital of 35 billion USD.-VNA