Japanese SMEs: Trend of Shifting Investment Overseas

According to the MPI, Vietnam is currently home to some 180 IPs, most of which are operating in areas that draw large FDI pool like the Mekong River Delta and the Red River Delta. There are currently over 4,000 FDI projects with total registered capital exceeding US$57 billion. Besides, Hanoi is encouraging development of supporting industries with an aim to increasing industrial production value. Foreign investment attraction is identified to be selective and focused on such areas as infrastructure, environmentally friendly industries, supporting industries, competitive industries and hi-tech areas, etc. Hanoi also has policies to stimulate investors to invest in IP groups and to provide supporting services.  

Japan currently ranks 4/92 countries and territories making FDI into Vietnam with 1,667 valid projects and registered capital of over US$23.6 billion. Most of these projects are in industries, supporting industries and hi-tech areas. However, there still exists a fact that Japanese SMEs are still reluctant to decide to make investment in Vietnam due to the lack of information about opportunities, investment environment and relevant information of policies on investment attraction and special investment preferences. So that Japanese SMEs can enter IPs in Vietnam and have effective cooperation as well as to generate high added value for the two nations, it is necessary that Vietnam and Japan develop a comprehensive strategy for attracting SMEs to IPs in Vietnam.

 

Before talking about specific solutions, I’d like to introduce a number of IP models of some Asian countries which are very successful at attracting Japanese SMEs so that Vietnam can draw lessons for itself. A typical example is the model of Amata Nakorn IP of Thailand. This IP aims at the Perfect City model, i.e. to develop a city inside the IP. Another example is the Delta Silicon IP model in Indonesia. With so many outstanding conditions, Japan already has a project to construct a centre of SMEs here.

 

As such, in the case of Vietnamese IPs, facilities are always the first and foremost factors of concern. In addition, our surveys point out that most factories built in Vietnamese IPs have areas ranging between 500 and 1,000 sq. metres. Meanwhile, our SMEs just demand for a premise of 300 sq. metres. Another requirement which seems a little bit more difficult lies in the fact that Vietnam has only set up a system of investment promotion offices within your country. Meanwhile, our SMEs wish to have such a system available in Japan so that they do not have to be in Vietnam to get needed information. Experiences have shown that it costs more to establish this system but the results it brings are very significant. Another factor is that Japanese enterprises want a developed IT system to be included in IPs’ infrastructure system since most of them are operating in supporting and manufacturing industries. The simplification of posting the “one-stop shop procedures” in Japanese and establish professional training schools according to Japanese working style and culture are other decisive factors.

 

Since 2004, Japan’s population structure tends to grow old, resulting in a dramatic reduction in the number of Japanese enterprises. Tokyo, therefore, calls for its enterprises to have plans for making investment overseas. The Government of Japan also allows establishment of Japan Chamber of Commerce with one million and three hundred members, most of which are SMEs. Meanwhile, Vietnam is really keen on attracting foreign investors into manufacturing field. With this common wish, I believe that Vietnam and Japan will have a lot of cooperation opportunities with high economic efficiency.

Nghe An province currently has 24 FDI projects of ten nations. The sugarcane and sugar project of the United Kingdom with the largest capital which has been implemented for more than 17 years has the largest capital across Southeast Asia of US$1.2 billion. Nghe An has so far attracted three Japanese investors, most of whom specialize in manufacturing area. The red address for foreign investors is Nghe An Southeast economic zone. Total investment capital amounts to VND2,300 billion. It is the province’s orientation to concentrate on attracting investors to IPs and economic zones. This is a very favourable condition for Japanese SMEs to have information about and implement their projects in Nghe An.

 

Through factual socio-economic development, it can be affirmed that IPs play a very crucial role in facilitating establishment of key areas of economic and industrial development. IPs in the province have attracted a lot of foreign investors in such industries as auto manufacturing and assembling, laptop and mobile phone production and hi-tech industries, etc. It is Vinh Phuc province’s wish to attract many investors, especially Japanese ones for economic efficiency and sustainable development.