Since the two countries established formal diplomatic relations 42 years ago, Vietnam and Japan have made a great progress in all aspects of cooperation like politics, economy, culture, society and education. The two governments have always focused on fostering the bilateral ties to elevate to a level, especially attracting Japanese capital into Vietnam.
Direct investment on the rise
In development cooperation, Japan is the largest official direct assistance (ODA) provider for Vietnam, with some 2,118 billion yen (US$24 billion), accounting for over 30 percent of total aid of all countries for Vietnam. Japan’s ODA for Vietnam is some 200 billion yen a year. The fund is primarily channelled into transport and port infrastructure and energy fields, thus making important contributions to Vietnam’s economic development in recent years.
According to the Foreign Direct Investment Agency ( MPI), by September 2014, Japan is the largest investor of Vietnam with 2,410 projects and total registered capital of US$36.31 billion. In 2014, Japan invested in 298 projects worth of nearly US$1,210 million, according to the General Statistics Office. Major destinations of Japanese investors were Thanh Hoa, Binh Duong, Hanoi, Ho Chi Minh City, Hai Phong and Dong Nai.
Japanese investors have invested in 18 industries in Vietnam, focusing on processing, manufacturing, real estate, construction, wholesaling and retailing, information and communications fields. Vietnam is also calling investment capital for these fields. A Japanese investor registered to spend US$9 billion into Nghi Son oil refining project in Thanh Hoa province. TOKYU Corp invested US$1.2 billion into Tokyo Binh Duong Township owned by Becamex Tokyu Co., Ltd. KOBELCO Iron Nugget Vietnam (KINV) also registered to invest US$1 billion.
Japan’s investment has been primarily channelled into the industry. And, heavy industries draw more investment capital than light industries. Construction also has received relatively big value of Japanese investment capital. However, service and agriculture sectors are disregarded by Japanese investors.
In industry, food - drink, metal and chemical production draws more investment capital than garment textile and footwear. Japan’s FDI into industry with high technical content is relatively high but the value will increase much more if supporting industries of Vietnam are more developed.
In the service sector, Japan’s FDI focuses on transportation, warehousing, communications, trade, motor vehicle repairing, asset business and consultancy. Currently, Japan is expanding its investment into wholesaling and retailing fields. Japan Logistic Systems Corporation invested to build warehousing facilities in Hanoi, Danang and Ho Chi Minh City - three major cities of Vietnam. Nissin Corporation partnered with Vietnam Railway Corporation to operate a cargo train to meet the growing demand of Japanese companies.
So far, Vietnam has 19 investment projects in Japan with a total registered capital of US$3.62 million.
Six industries to draw FDI from Japan
To attract more investment capital from foreign investors in general and Japan in particular, the Ministry of Planning and Investment of Vietnam worked with the Japan International Cooperation Agency (JICA)’s experts to build the Vietnam Industrialisation and modernisation Strategy in the framework of Vietnam - Japan cooperation, where specifies six priority sectors for development: Electricity, electronics; food processing; agricultural machinery; shipbuilding; environmental industry and energy conservation; automobile and parts production plus supporting industries.
The determination of six priority sectors plus supporting industries will fully utilise potential and advantages of the two countries and promise to open a new phase in attracting foreign direct investment by developing supporting industries and creating more added value for made-in-Vietnam products.
In addition to determining future cooperation directions, Vietnamese authorities are coordinating with JICA and relevant bodies of Japan to study on the construction of two specialised industrial zones in Haiphong City and Ba Ria - Vung Tau Province to serve Japanese companies doing business in Vietnam.
Following the positive results of the fourth stage of Vietnam-Japan Joint Initiative, the Ministry of Planning and Investment is also cooperating with the Ministry of Economy, Trade and Industry of Japan (METI) and the Japan Business Federation (Keidanren) to carry out the fifth phase of the Joint Initiative where the two sides will focus on finding ways to remove bottlenecks in business and investment in some fields like retail, real estate, and supporting industries to unlock more ways for Japan’s investment into these fields.
Quynh Anh
Vietnamese
