The Vietnamese Ministry of Planning and Investment and the Japanese Embassy in Vietnam recently hosted the VJIT Phase III Evaluation and Facilitation Committee Meeting in Hanoi.
The meeting confirmed that after six years, the action plan of the Vietnam - Japan Joint Initiative achieved the objectives of improving the investment environment and strengthening Vietnam’s economic competitiveness. Vietnam’s economy has expanded at a high growth rate.
The country’s GDP is estimated to grow 6.7 percent in 2010 and at higher rates in following years. To boost Vietnamese economic performance and competitiveness, the Government of Vietnam expects to hold direct, open dialogues with the business community and Japanese donors.
Victoria Kwakwa, World Bank Country Director for Vietnam, said: In the past five years, the Government of Vietnam has faced many economic challenges as well as the global economic crisis. In 2009, there were many concerns about macroeconomic stability but Vietnam was still an attractive investment destination, although many difficulties and challenges face investors when they come to Vietnam. The Government has made efforts to improve economic performance in both the public and private sectors.
The UK-based Financial Times quoted Mr Takahiro Shimonuma, a representative of the Japanese Ministry of Economy, Trade and Industry (METI) in Hanoi, as saying that, 20 years ago, Japanese companies thought of Vietnam as a low-cost production base, but now that is changing and they are attracted by the growth of the Vietnamese market.
According to many international economists, Vietnam achieved important results in macroeconomic regulation, maintained growth momentum in the midst of global economic downturn, sustained economic stability, and improved the business environment. Vietnam is considered a reliable destination for international investors in search for growth.
With positive outlooks for the Vietnam’s economy, Japanese financial services firm Orix Corp has agreed to buy a 25 percent stake in Indochina Capital, one of largest foreign-operated fund management companies in Vietnam. The Orix investment is the latest evidence of an investment-strengthening wave of Japanese companies into this market.
At present, the Japanese Government considers expanding economic relations with Vietnam a policy priority, as part of a wider effort to help Japanese companies prosper overseas. Tapping the growth potential of Vietnam and other Asian neighbours is seen as vital to boosting Japan’s own anaemic economic growth rate.
At a bilateral summit held in Hanoi in October, Vietnam and Japan reached an agreement under which Japanese companies would help Vietnam build two nuclear power plants.
After investing in Indochina Capital, Orix said in a statement released on December 1 that it would help expand Indochina Capital’s fund management business. The two companies will also work together to advise Japanese companies looking to do business in Vietnam. “Interest in Vietnam from Japanese companies has increased very significantly over the last six to nine months,” said Peter Ryder, Managing Director of Indochina Capital.
Mr Peter Ryder added that the latest investment flurry is being driven by improved political contacts between the two countries and by currency movements. While the Japanese yen has appreciated fairly significantly against the US dollar this year, the Vietnamese dong has been depreciating. It is about 20 per cent cheaper for Japanese companies to invest here than it was six months ago.
Although Japanese investors have typically focused on industries such as manufacturing and construction, the past few weeks has seen renewed interest in Vietnam’s financial services industry. Shinsei Bank, which is partly owned by the Japanese Government and JC Flowers Group, has sealed an alliance with Baoviet Holdings, Vietnam’s largest insurer, and SBI Holdings Inc, a financial services group, has agreed to acquire a 20 percent stake in FPT Securities Joint Stock Company. Besides, Japanese retailers such as Takashimaya and Isetan Mitsukoshi are also considering opening stores in Vietnam to target the rapidly growing middle class.
According to experts, Vietnam has achieved important results in macroeconomic regulation, maintained growth momentum, sustained economic stability, and improved the business environment. However, many macroeconomic paradoxes need to be reviewed and addressed, including high inflation, and the world’s highest interest rates for deposits and credits. The Vietnamese Government is recommended to evaluate the effect of investment and the activities of all economic sectors to make necessary changes to tap resources for stronger and more sustainable growth in 2011.
C.T
Vietnamese
