Reality shows that cooperation between Vietnam and Japan after nearly 40 years of diplomatic relations has been built on a solid, reliable and comprehensive foundation in all areas. Looking towards the 40th anniversary of diplomatic relations between Vietnam and Japan (1973-2013), Vietnam Business Forum has an interview with Mr Harumitsu Hida, Consul General of Japan in Ho Chi Minh City, about cooperation between the two countries. Duy Khang reports.
Could you please tell us about some significant milestones over the 40 years of diplomatic relations between Vietnam and Japan?
Japan and Vietnam officially established diplomatic relations on 21 September, 1973. Japan established its embassy in Vietnam in October 1975. A year later, Vietnam established its embassy in Tokyo. The two countries have been building diplomatic relations since then.
In 1992, Japan resumed ODA to Vietnam. Also from this time, Japanese investment grew rapidly. After the financial crisis in Asia, in 2000, Japanese investment boomed in Vietnam for the 2nd time. Many major Japanese corporations invested in the northern region. After temporary delays due to the impact of the Lehman shock, Japanese investors have continued to grow investment here.
In recent years, the two countries have frequently exchanged high level political visits. In 2007, for the first time in the history of the Japan – Vietnam relations, President Nguyen Minh Triet visited Japan. Two years later, Crown Prince of Japan came to Vietnam at the invitation of the State. The Japan - Vietnam Joint Statement announced in October 2011 was a milestone which demonstrated the two sides’ commitment to strengthening comprehensive cooperation, contributing to peace and stability in Asia, and improving bilateral relations to new heights.
In terms of investment, the number of Japanese investors in Vietnam is increasing. The amount of Japanese FDI disbursement in Vietnam has reached US$5.18 billion, to rank first among countries and territories investing in Vietnam. As of February 2012, Japan was also a leading country with an accumulated registered FDI amount of US$24.7 billion.
On trade, total exports of the two countries almost doubled, from US$8.41 billion in 2005 to US$16.7 billion in 2010. Japan remains Vietnam's 3rd largest trading partner, only after China and the USA.
Japan is the largest ODA donor for Vietnam; could you tell us about the projects using Japan's ODA in the South and the effectiveness of these projects?
In recent years, Japan's annual aid for Vietnam is about US$1.8 billion. Specifically, in fiscal year 2011, the amount of ODA to Vietnam reached over ¥270 billion; the highest amound so far.
Japan's ODA for Vietnam focuses on four key areas. 1) Promotion of Economic Growth and Strengthening of International Competitiveness. 2) Improvement of Social Living Conditions and Corrections of Disparities. 3) Environmental Conservation. And 4) Strengthening of institutional reform.
Some typical projects include subway system projects in HCM City (route 1, Ben Thanh-Suoi Tien), the project to improve the water environment in the south of Binh Duong Province; highway projects Ho Chi Minh city-Long Thanh-Dau Giay; projects on international port of Cai Mep-Thi Vai; East-West Highway project; Can Tho Bridge; Tan Son Nhat International Airport Terminal; Phu My thermal power plants; Cho Ray Hospital, and more. to improve the water in the of Province; highway projects Ho Chi Minh city-Long Thanh-Dau Giay; projects on international port of Cai Mep-Thi Vai; East-West Highway project; Can Tho Bridge; Tan Son Nhat International Airport Terminal; Phu My thermal power plants; Cho Ray Hospital, and more.
Overall, Japan's ODA projects in Vietnam are implemented very well, contributing greatly to the infrastructure improvement in Vietnam and promoting economic development and foreign investment.
In addition, the Consulate General of Japan also has granted ODA on a small-scale basis in the field of basic living. During 1995-2011, Consulate General of Japan donated up to US$8.704 million for 118 projects focused on health, education, environment, population and agriculture, forestry and fisheries.
What are, in your opinion, the important factors needed for the promotion of Vietnam - Japan relations in the future?
Vietnam aims to become an industrialized country by 2020. However, its supporting industry has not been developed. The rate of locally-made parts only reaches 24 percent (compare that to the rate of 55 percent of Thailand). The manufacturing industry of Vietnam mainly focuses on assembly plants using intensive labour and processing industries. In addition, basic industry remains weak.
On trade, Vietnam's exports mainly include crude minerals, fishing and light industry products, while it has to import raw materials and components, which leads to trade deficit due to trade structure. Japan can cooperate with Vietnam to develop its supporting industries, helping Vietnam become an industrialized country.
Japan – Vietnam’s Joint Statement in 2011 set the 40th anniversary of diplomatic ties between the two countries as the Japan- Vietnam Friendship Year. In 2013, the two sides will organize more cultural exchanges to enhance mutual understanding.
Vietnam and Japan signed an investment agreement in 2003, what is your assessment on the agreement after 10 years?
The Japan - Vietnam Investment Agreement is the foundation to ensure investment and increase the stability of the investment environment. With the completion of the foreign investment law, WTO accession in 2007, along with the FTA between Japan and Vietnam (October 2009), the risk prevention policy to invest in China, and Chinese policy + 1, not only in manufacturing but also in the distribution and services, through these agreements, foreign investment in Vietnam has increased sharply, especially from Japan. In just the first quarter of 2012, direct investment from Japan accounted for more than 70 percent of the total registered FDI capital in Vietnam.
In your opinion, what issues need to be addressed immediately in order to attract direct investment from Japan to Vietnam?
First, Vietnam needs to focus on improving basic construction. Second, the country should ensure a stable workforce. Third, it also needs to address the illegal labour strikes. Last but not least, the quality of hospitals should be improved, as well as housing for foreigners.
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