Vietnam eyes new Japanese investment inflow

Vietnam is likely to see a new wave of investment from Japan as its investors have shown continued interest in the Southeast Asian market, predicted experts.
Vietnam eyes new Japanese investment inflow ảnh 1Nissin Manufacturing Vietnam's factory at Hoa Binh Province's Luong Son Industrial Park (Photo: VNS/VNA)

Vietnam is likely to see a new wave of investment from Japan as its investors have shown continued interest in the Southeast Asian market, predicted experts.

Recently, a delegation of 30 businesses from the Japan Business Federation (Keidanren) attended the 2015 Vietnam-Japan trade and investment promotion forum in Ho Chi Minh City to explore the investment and business environment.

According to Keidanren Senior Managing Director Mukuta Satochi, Vietnam is considered a gateway for Japan to enter the ASEAN market.

As the ASEAN Economic Community forms at the end of this year, Vietnam’s role as a business venue in the global supply chain strategy will increase, he said.

Meanwhile, Hirotaka Yasuzumi, Managing Director of the Japan External Trade Organisation (JETRO) office in Ho Chi Minh City , said a study by JETRO revealed that Vietnam is chosen by a majority of Japanese businesses operating in Thailand and China as a place to locate their manufacturing facilities within the Thailand-Plus-One and China-Plus-One strategies.

The Japanese enterprise trend of shifting to a third country from China is increasing, mostly targeting ASEAN countries, especially Vietnam, he said.

The JETRO survey also reported that most enterprises have been restructuring their facilities abroad for two-three years while 595 out of the 3,471 firms involved in the survey plan to restructure in the next two-three years. About 780 projects are scheduled to change locations.

Abundant labour resources and low costs are among Vietnam’s attractive characteristics, said Hirotaka, noting that payments for a well-trained worker with good foreign language skills in Ho Chi Minh City is about 440 USD per person per month, half the cost in Guangzhou, China.

The price for power is about 0.09 USD/kilowatt hour and water is about 0.43 USD/cubic metre, two or three times cheaper than those in Manila (the Philippines ) and Guangzhou .

According to JETRO, 62.3 percent of Japanese enterprises in Vietnam were profitable last year, rising from 59.2 percent in 2013.

Statistics from the Foreign Investment Agency under the Ministry of Planning and Investment showed that in the first seven months of this year, Japan was the fifth largest FDI investor in Vietnam with 176 new and 82 expanded projects with combined capital of 716 million USD.

Thus far, Japan has had 788 valid projects in Ho Chi Minh City worth 2.72 billion USD, mostly in property, processing, manufacturing, whole sale & retail, motors, automobile repair and science-technology.

Le Thanh Liem, Vice Chairman of the Ho Chi Minh City People’s Committee, said the city is in need of Japanese investment in a number of key projects in urban railway, wastewater treatment and trade.

He called on firms to engage in specific projects, including monorail lines 1 and 6, a 49.54-million-USD West Saigon wastewater treatment plant and a 312-million-USD underground trade centre in Ben Thanh central station.

He also revealed that Ho Chi Minh City will focus on setting up cooperation with various Japanese localities, including Osaka, Hyogo, Shiga and Yokohama, while signing a framework deal on economic cooperation with the Kansai Bureau of Economy, Trade and Industry as part of efforts to connect Vietnamese and Japanese enterprises.-VNA

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