JETRO Hanoi: Japanese Investment to Vietnam to Continue Inreasing

2:16:09 PM | 11/6/2019

Japanese investors have always paid special attention to the Vietnamese market for many years and strongly expanded their businesses in recent years thanks to Vietnam’s attractive and favorable investment environment, told Mr. Hironobu KITAGAWA, Chief Representative of the Japan External Trade Organization (JETRO), in an interview with Vietnam Business Forum – VCCI. Nam Pham reports.

Can you give some remarks of the trade and investment relations between Vietnam and Japan in recent years?

In 2018, the number of Japanese investment projects in Vietnam reached the highest level ever of 630 projects with a total investment of about US$8 billion, the second highest investment level up to now.

Every year, JETRO makes surveys on Japanese enterprises investing in Vietnam. According to survey results in 2018, when being asked about the plan to operate in the period from 1 to 2 years, nearly 70% of Japanese enterprises that have been investing in Vietnam answered that "want to widen business activities ”. This figure within ASEAN countries is also at the top.

Japanese investors have always paid special attention to the Vietnamese market for many years and strongly expanded their businesses in recent years thanks to Vietnam’s attractive and favorable investment environment. Impacts from the trade conflicts between the U.S and China are not the main reason for the investment growth and movement of Japanese investment from China to Vietnam. Vietnam, therefore, needs to take advantages to create more favorable business and investment environment to attract more Japanese investors to Vietnam in coming time.

Japanese investors always have long-term business strategies and need long-term, stable places for production, manufacturing industries, therefore, they have selected Vietnam as one of the best destinations to invest. There is no big changes in the investment movement, and it has been a step by step movement for many years.

The most important mission of JETRO is the investment and trade promotion of Japanese enterprises in Vietnam. We mainly support small and medium enterprises to invest abroad in many different fields, mostly producing and manufacturing. In recent years, it’s not only in manufacturing sector, but also services and agriculture.

Japan has been trying utmost to speed up Vietrnam’s supporting industries. Can you show several difficulties in developing the industries?

However, one of the difficulties is "the localization rate of raw materials, supplies and components is still low".

The localization rate of Japanese materials, supplies and components in Vietnam is 36.3%. Although there is an annual increase but still low compared to China's rate of 66%, Thailand's rate is 57%. Therefore, enterprises are forced to import from neighboring countries such as Thailand and China.

This is the reason leading to increased costs and great risks for Japanese enterprises operating in the manufacturing sector in Vietnam, and also causing difficulties in maintaining medium and long-term production activities in Vietnam.

In addition, in the industry of manufacturing raw materials, components and supplies, also known as "Supporting industries" is largely undertaken by small and medium enterprises. However, restrictions on mechanisms and policies to support the development of small and medium enterprises are one of the outstanding issues in Vietnam.

In the other hand, if the above problems are solved, there will be more and more Japanese enterprises paying attention and interested in to the producing and manufacturing industry in Vietnam. Moreover, it is likely that Vietnam will be recognized by the world as having high producing and manufacturing techniques.

Focusing on human resources, sharing experience and technologies regularly between Vietnamese and Japanese companies, as well as meeting requirements of each other will be effective, win-win solutions to cooperate, develop and increase localization rates.  

Can you introduce highlights of the coming “8th Vietnam – Japan Supporting Industries Exhibition” in Hanoi?

In order to support the development of Vietnam's supporting industry as well as create an environment for commercial connection between Vietnamese suppliers and Japanese purchasing enterprises, JETRO organized "Vietnam – Japan Supporting Industries Exhibition” alternately in Ho Chi Minh City and Hanoi starting in 2004. In September 2003, leaders of Japan and Vietnam agreed to hold this exhibition. The exhibition was first held in Ho Chi Minh City in 2004, this year is the 16th we organized this event and the 8th held in Hanoi.

Up to now, many businesses have participated in the exhibition and JETRO has listened to comments from many businesses. One of those ideas is the desire for new products of high quality, stable transactions, reliable partners.

JETRO as an organizational unit, we will try our best to bring new things, create "good opportunities" for businesses.

What are your comments on the future of Japan-Vietnam cooperation relations in coming years?

It can be said that the current relationship between Japan and Vietnam is very good. Last year, the leaders of Vietnam’s State and Governement made the official visits to Japan in May and October respectively. During the visits, the State President and Prime Minister spent time making their speech at the "Investment Promotion Conference" organized by JETRO and sent to Japanese businesses, investors strong messages. In particular, it has left a deep impression on the relationship between Japan and Vietnam in the economic aspect.

As you know, Japan welcomed a new period in May 2019 when the new Emperor was enthroned, the date was changed from "Heisei - achieving peace (Binh Thanh)" to "Reiwa – beautiful harmony (Lenh Hoa)". Reiwa - meaning spring sign, is the year that brings the desire for a Japan where everyone has hope in tomorrow and can achieve the wish for the future like blooming apricot flowers .

From the efforts to organize trade and investment promotion events in coming time, I hope that your businesses as well as the economies of Japan and Vietnam will develop strongly as Reiwa.

Thank you so much!