In the annual survey of Japanese producers in Asia last year by Japan Trade Promotion Organisation (JETRO), over 75 per cent of Japanese producers operating in Vietnam selected Vietnam as the best investment destination for the next 5-10 years. The rate of 75 per cent is the highest level for a country selected by Japanese investors.
The survey results also showed that 82.4 per cent of Japanese production companies plan to expand operations in Vietnam. This is a high number compared with the regional average of 58.2 per cent. Most Japanese investors highly appreciate Vietnam for its social and political stability. Especially, Vietnam provides cheaper prices than China for labour and production in some industries such as electricity, electronics, electricity-electronics spare parts, and metal products.
Affirming these survey results, foreign investment flow into Vietnam continued to grow strongly and hit a record level in the first ten months of 2007.
According to Vietnam’s General Statistics Office, the government has approved foreign projects valued up to US$9.75 billion after granting licenses for 1,144 new projects as of this October. Of this, about US$3.71 billion has already been pumped into Vietnam and put to use.
If 300 licensed projects worth total US$1.5 billion are included, total foreign investment capital is up to US$11.26 billion, up 36.4 per cent on year.
Vietnam has many competitive advantages over other countries in the region, JETRO said. One of these advantages is political stability. Vietnam also has a stable and high growth rate of 7-8 per cent on average, abundant human resources and low-cost labour. Besides, Vietnam has advantages in geographical location, lying between ASEAN and China. The country has received a lot of ODA loans from Japan, so Japanese investors expect that they will partially benefit from ODA-funded projects when investing in Vietnam.
In addition, since 2005 many Japanese businesses have been moving investment from other countries in the region to Vietnam to disperse risk. However, Japanese investors conduct specific surveys before investing in Vietnam. Japanese investors understand the value of Vietnam’s accession to the World Trade Organisation (WTO).
According to Mr Katano, deputy chief representative of JETRO in Hanoi, although Japanese investors highly appreciate the investment environment in Vietnam, Vietnam still has some weaknesses in terms of infrastructure, administrative procedures, and the development of accessory industries. He said, “If it solves these shortcomings, Vietnam will attract more foreign investors, not only from Japan."
Following are ideas of experts about this issue:
Mr Nakato Masanori – Deputy General Director of Sakaguchi Plastics Vietnam Company
We arrived in Vietnam with the introduction of friends who were successful in Vietnam. We chose Amata Dong Nai Industrial Park because the investment environment here is very good, with complete and modern technical infrastructure, good security, and professional management. Especially, the electricity system is very stable, which is important for our plastic production. Local authorities have created favourable conditions for us. After over two years of operation here, our company has gone into stable production. Sakaguchi Plastics Vietnam’s products include plastic connectors to link electric wire inside house to outside.
In general, Vietnam’s investment environment has been improved, and I know many Japanese investors plan to invest in Vietnam. However, Vietnam should make progress in traffic infrastructure, especially public transport, to meet travel demand from labourers, and people working in industrial parks and processing zones.
Mr Takechi Tasumi, general director of JFE SHOJI Steel Vietnam Co (JSSV)
With the open investment environment, many foreign investors have invested in Vietnam’s steel sector, creating a busy and competitive market. JFE Shoji Steel Company has also built a steel ingot processing plant with modern technology in Amata Industrial Park.
However, in order to facilitate goods transport activities, Vietnam needs to improve its transport infrastructure. Currently, transport from Ho Chi Minh City to industrial zones in Dong Nai Province is still difficult due to traffic jams, especially in rush hours, taking much time and cost for goods transport. In addition, Vietnam should expand ports to make export and import more convenient.
Mr Yasushi Nagashima, General Director of MOL Logistics Company (Vietnam)
Vietnam’s economy is growing quickly, and the opportunity for developing the logistics industry is very big. However, current transport cost and fees in Vietnam is still higher than in other countries in the region. Therefore, Vietnam needs to improve the infrastructure system such as roads, river ports and sea ports to transport goods more quickly and conveniently, reducing fees.
Mr Y.Yamada, former Director of JETRO Centre in Hanoi, member of Japan-Vietnam Common Initiative CommitteeThe investment environment in Vietnam is being improved. Foreign investment, including Japanese investment, in Vietnam has rebounded since late 2004. The main reasons for the sharp increase are Vietnam’s social and political stability, and fast economic growth in the context of world risks of terrorism, rising oil prices, and the appreciation of the Chinese Yuan. Vietnam’s government has made efforts to improve the investment environment, and integrate into the world economy, while stabilising its social and political systems and maintaining a high economic growth rate. Vietnam also has advantages in its geographic location, natural resources, and abundant and low-cost labour force.
Vietnam is becoming a very attractive investment destination for Japanese investors. However, Vietnam also needs to further improve the legal system to make Japanese businesses feel secure when investing.
Le Nam Trung, Director of TNHH Taiheiyo Shinju – Vietnam Company, Ltd.
Vietnam’s current investment environment has seen radical changes, including the simplification and transparency of administrative procedures. However, some issues still discourage foreign investors including corruption and the complicated tax system. Tax management is not consistent.
To make the country’s investment environment more attractive for foreign investors, I think apart from granting investment licenses and creating an open investment environment, which is appreciated by foreign investors, the local government should further improve the tax and advertisement system, creating more favourable conditions for investors which have been and will invest in Vietnam.
NOBUHIKO MURAKAMI, TOYOTA’s General Director
Vietnam’s investment environment has been improved over the past time. After joining the WTO, the country’s investment environment must be further improved to meet international standards. As a result, I think investments in Vietnam will increase in the coming time.
One important element to increasing foreign investment in Vietnam compared with other countries is rapid and stable economic growth. Besides, Vietnam has a stable political system, good security, and a large population providing a potential market. Especially, the potential in human resources and labour is the main reason foreign investors decide to expand production or choose Vietnam as long-term investment destination.
It is not an accident that we chose Vinh Phuc Province to invest in. Previously, we had considered and highly appreciated the favourable conditions the province offers. We believe Vinh Phuc will improve the road transport system and stabilise supporting services such as electricity and water to meet increasing demand for business production.”
In my opinion, Vietnam should further promote its business environment to attract more foreign direct investment. It should have proper and stable policies to create favourable conditions for business development. The government should focus on building long-term policies and investment incentives, reducing unnecessary administrative procedures, developing services, and expanding markets as well as improving infrastructure. I believe foreign investment will increase in the coming time and make a significant contribution to socio-economic development and the happiness of local people.
TOYOTA Vietnam (TMV) was set up in 1996. We are proud that with the target to encourage the individual creativeness and collective spirit, TMV has quickly become one of the most successful foreign companies in Vietnam. TMV leaders are confident that TMV will contribute more to economic development and especially Vietnam’s young automobile industry in the years to come.
T.Tien-L.Tuan-G.Tu
Vietnamese
