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 (Photo: VNA)Hanoi (VNS/VNA) - Japanese investmentin Vietnam is expected to grow this year, given Japan’s recent initiative toshift investment to Vietnam and other Mekong River nations, as well as freetrade agreements (FTA), experts said.
According to Hironobu Kitagawa, chiefrepresentative 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 ofnearly 8 billion USD.
“Currently, many Japanese investors are comingto Vietnam to seek business opportunities and I expect Japan and Vietnam willmaintain good business ties,” Kitagawa told Vietnam News.
“Competitive human resources, economic andmarket growth, and a dynamic society are considered factors that make Vietnaman attractive destination for Japanese firms to develop their business in thefuture,” Kitagawa said, noting Japanese investors can promote the advantages,given by Vietnam’s expanding economic ties with many other countries across theworld thanks to its active participation in FTAs such as the Comprehensive andProgressive Agreement for Trans-Pacific Partnership (CPTPP).
Kitagawa said a JETRO recent survey oninvestment trends among Japanese firms operating in Vietnam in the 2018 fiscalyear showed nearly 70 percent of Japanese businesses want to expand operationsin Vietnam after gaining good business performance last year. A total of 65.3percent of the 723 Japanese companies recorded high profits in Vietnam in 2018,according to the survey.
The majority of these companies said the marketscale and growth are the greatest advantages of Vietnam’s investmentenvironment. Other positive factors include low labour cost and politicalstability.
“Vietnam ranked fourth in political and socialstability, and cheap labour cost while its market size and growth took thesixth position in the ASEAN, Southwest Asia and Oceania regions,” Kitagawacited the survey as saying.
Besides, experts forecast the Japaneseinvestment inflow to Vietnam would benefit from a Japan Chamber of Commerce andIndustry initiative to shift Japanese investment to Vietnam and other MekongRiver nations with an aim to enhance economic partnerships between the twosides.
“Japan's initiative to move its investments tothe Mekong region nations will likely see Vietnam receive a significant sliceof the pie, particularly if these investments are in lower-end manufacturing,”Jason Yek, country risk analyst of Fitch Group’s Fitch Solutions, told VietnamNews.
Yek explained China accounts for 11.6 percent ofJapan'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 fromlow-end manufacturing and the rising labour costs in China, this will likelysee much of these Japanese direct investments shift to countries like Vietnam,which boasts a relatively cheap and educated labour force alongside a large andgrowing working class population.
However, instead of just focusing onmanufacturing, Kitagawa forecast Japanese investment inflow to Vietnam’snon-manufacturing industries would keep rising in 2019 and in the next fewyears.
“Japanese investment in Vietnam’snon-manufacturing industries, such as retail, wholesale, IT, professionalsupport and education, will continue to increase, fuelled by the rising growthof Vietnam’s consumption market,” Kitagawa said.
Non-manufacturingindustry accounted for about 70 percent of Japan’s total investment capital in Vietnamin recent years. Especially, the growth rate of the industry was higher thanthat of the manufacturing.
According to experts, the shift of thisinvestment capital flow is aimed to catch up with huge opportunities from theCPTPP and the Regional Comprehensive Economic Partnership (RCEP).
Vietnam, which is considered one of theattractive consumption markets in the region with a population of some 100million people, is luring foreign investors, including Japanese. Like China 10years ago, incomes of Vietnamese consumers are getting higher and they are alsospending more for consumption.
According to Kitagawa, Vietnam's businessenvironment is relatively good compared to other countries in the ASEAN region.
However, to further attract Japanese investorsto Vietnam, he noted the JETRO's survey showed it was important for Vietnam tostreamline the country’s legal system as it remained inadequate and lesstransparent.
According to the survey, local authorities stilllack prior research on legal content and delay in issuing documents to guidethe implementation of laws, which cause adverse impacts on investors’ works andan inconsistency in the laws and execution.
In addition, Vietnam’s tax regime, such aspersonal income tax, transfer pricing and value added tax (VAT) invoice,remains complicated and inconsistent.
Besides, Kitagawa suggested the VietnameseGovernment should further promote existing plans, such as the Japan-VietnamJoint Initiative and the Vietnam Business Forum, which would enable it tocontinuously listen to the opinions of Japanese businesses with an aim toimprove the country’s business environment.
“In addition, the implementation of investmentpromotion seminars with careful and effective preparation on Vietnam'sinvestment environment-related documents should be also enhanced to facilitateinvestors in seeking information on investment and business opportunities inthe country,” Kitagawa said.-VNS/VNA
According to Hironobu Kitagawa, chiefrepresentative 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 ofnearly 8 billion USD.
“Currently, many Japanese investors are comingto Vietnam to seek business opportunities and I expect Japan and Vietnam willmaintain good business ties,” Kitagawa told Vietnam News.
“Competitive human resources, economic andmarket growth, and a dynamic society are considered factors that make Vietnaman attractive destination for Japanese firms to develop their business in thefuture,” Kitagawa said, noting Japanese investors can promote the advantages,given by Vietnam’s expanding economic ties with many other countries across theworld thanks to its active participation in FTAs such as the Comprehensive andProgressive Agreement for Trans-Pacific Partnership (CPTPP).
Kitagawa said a JETRO recent survey oninvestment trends among Japanese firms operating in Vietnam in the 2018 fiscalyear showed nearly 70 percent of Japanese businesses want to expand operationsin Vietnam after gaining good business performance last year. A total of 65.3percent of the 723 Japanese companies recorded high profits in Vietnam in 2018,according to the survey.
The majority of these companies said the marketscale and growth are the greatest advantages of Vietnam’s investmentenvironment. Other positive factors include low labour cost and politicalstability.
“Vietnam ranked fourth in political and socialstability, and cheap labour cost while its market size and growth took thesixth position in the ASEAN, Southwest Asia and Oceania regions,” Kitagawacited the survey as saying.
Besides, experts forecast the Japaneseinvestment inflow to Vietnam would benefit from a Japan Chamber of Commerce andIndustry initiative to shift Japanese investment to Vietnam and other MekongRiver nations with an aim to enhance economic partnerships between the twosides.
“Japan's initiative to move its investments tothe Mekong region nations will likely see Vietnam receive a significant sliceof the pie, particularly if these investments are in lower-end manufacturing,”Jason Yek, country risk analyst of Fitch Group’s Fitch Solutions, told VietnamNews.
Yek explained China accounts for 11.6 percent ofJapan'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 fromlow-end manufacturing and the rising labour costs in China, this will likelysee much of these Japanese direct investments shift to countries like Vietnam,which boasts a relatively cheap and educated labour force alongside a large andgrowing working class population.
However, instead of just focusing onmanufacturing, Kitagawa forecast Japanese investment inflow to Vietnam’snon-manufacturing industries would keep rising in 2019 and in the next fewyears.
“Japanese investment in Vietnam’snon-manufacturing industries, such as retail, wholesale, IT, professionalsupport and education, will continue to increase, fuelled by the rising growthof Vietnam’s consumption market,” Kitagawa said.
Non-manufacturingindustry accounted for about 70 percent of Japan’s total investment capital in Vietnamin recent years. Especially, the growth rate of the industry was higher thanthat of the manufacturing.
According to experts, the shift of thisinvestment capital flow is aimed to catch up with huge opportunities from theCPTPP and the Regional Comprehensive Economic Partnership (RCEP).
Vietnam, which is considered one of theattractive consumption markets in the region with a population of some 100million people, is luring foreign investors, including Japanese. Like China 10years ago, incomes of Vietnamese consumers are getting higher and they are alsospending more for consumption.
According to Kitagawa, Vietnam's businessenvironment is relatively good compared to other countries in the ASEAN region.
However, to further attract Japanese investorsto Vietnam, he noted the JETRO's survey showed it was important for Vietnam tostreamline the country’s legal system as it remained inadequate and lesstransparent.
According to the survey, local authorities stilllack prior research on legal content and delay in issuing documents to guidethe implementation of laws, which cause adverse impacts on investors’ works andan inconsistency in the laws and execution.
In addition, Vietnam’s tax regime, such aspersonal income tax, transfer pricing and value added tax (VAT) invoice,remains complicated and inconsistent.
Besides, Kitagawa suggested the VietnameseGovernment should further promote existing plans, such as the Japan-VietnamJoint Initiative and the Vietnam Business Forum, which would enable it tocontinuously listen to the opinions of Japanese businesses with an aim toimprove the country’s business environment.
“In addition, the implementation of investmentpromotion seminars with careful and effective preparation on Vietnam'sinvestment environment-related documents should be also enhanced to facilitateinvestors in seeking information on investment and business opportunities inthe country,” Kitagawa said.-VNS/VNA
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