Still much room for Japanese investment in Vietnam

Japanese businesses have invested in 48 of the 63 centrally-controlled provinces and cities in Vietnam, and there is still much room for Japanese investment in the country.
Leading the 101 countries and territories

Japan is currently the largest foreign direct investor in Vietnam. According to the Ministry of Planning and Investment, with 2,237 projects and total registered capital of US$35.38 billion by the end of this March, Japan led the 101 countries and territories in terms of foreign direct investment (FDI) in Vietnam. Japanese projects have average investment capital of US$15.8 million compared with US$14.58 million per foreign invested project in Vietnam. Japanese projects usually have good technology and seriously observe Vietnamese policies and laws. Many Japanese big-name groups made their presence felt in Vietnam such as Honda, Toyota and Canon.

Japanese investors have invested in 18 of the 21 economic sectors in Vietnam in four forms including entirely foreign invested companies (1,838 projects and US$19.4 billion accounting for 82.2 percent of all Japanese projects and 54.8 percent of total Japanese investment capital), joint ventures, joint stock companies and business cooperative contracts.

Japanese companies have invested in 48 of the 63 centrally-controlled provinces and cities in Vietnam. Leading them was Thanh Hoa Province attracting US$9.67 billion and accounting for 27.3 percent of total Japanese investment capital. It was followed by Binh Duong Province attracting US$4.18 billion and accounting for 11.8 percent of total Japanese investment capital, and Hanoi with US$3.86 billion and 10.9 percent, respectively.

Much room for Japanese investment

Vietnam still has much room for Japanese investment although Japan is already the largest foreign investor in Vietnam.

Minister of Planning and Investment Bui Quang Vinh said that Vietnam and Japan have had political and diplomatic relations for more than 40 years and many similarities in terms of culture and society providing good conditions for Japanese businesses to choose to invest in Vietnam. More importantly, Japanese investors see that the Vietnamese investment environment is very attractive.

According to a Japan External Trade Organization (JETRO) report on Japanese investment trends towards Vietnam, 60 percent of Japanese businesses in Vietnam have made profit and over 70 percent of them plan to expand business in Vietnam compared with 66.4 percent in Indonesia, 66.2 percent in Thailand, 58.1 percent in the Philippines, 54.2 percent in China and 51.6 percent in Malaysia.

Japanese businesses have realized Vietnam’s advantages, regarding geographical position, the workforce, the scale of the market, and stable politics. However, shortcomings such as inconsistent laws, complicated administrative procedures, rapidly-increased labor costs and undeveloped support industries have hindered Japanese investors in the country. For this reason, to increase Japanese investment capital, Vietnam needs to step by step overcome these shortcomings./.