“How can Vietnam become a credible country?” was an important question that Mr Atsusuke Kawada, Chief Representative of the Japan External Trade Organisation (JETRO) in Hanoi, raised at a recent forum. Non-transparent business environment, low and even unsafe product quality, inexperienced and untrustworthy enterprises are major barriers that foreign investors fear when they come to Vietnam.
A JETRO survey into Japanese companies operating in Vietnam showed that 77.9 per cent cited an excessive increase in employee wages; 65.2 per cent had difficulty finding locally sourced purchasing materials and above half (55.8 per cent) said that administrative, customs and tax formalities were complicated. Many Japanese businesses were required to pay informal and irrational fees when doing business in Vietnam.
Trust building
He advised that creating Vietnamese competitive products is crucial when starting up business in Vietnam. To do this, companies must be able to reduce production costs, raise product quality, enhance productivity and performance of production operations, and train human resources to meet new requirements. The support from the Government of Vietnam for business operations is very important, but the effort from enterprises is even much more important.
He noted, “Even Vietnamese people tend not to trust Vietnam’s products and foods, and they seemingly prefer items imported from foreign countries. Japan used to be like this and Japanese people doubted Japanese products as they did not know whether those products were better or cheaper. By making continuous efforts for better quality, Japan’s products have reached the current level.”
Solutions suggested by Mr Atsusuke are very practical for Vietnamese enterprises. To cut production costs, they should adopt a flexible approach to effective free trade agreements (FTAs) and the Trans-Pacific Partnership (TPP). Collecting information from export markets and inspection stages is essential. He said that companies will have more opportunities to expand their exports by attending business connections, trade exchanges and trade fairs held in Vietnam.
Currently, JETRO is operating the Trade Tie-up Promotion Programme (TTPP). Vietnamese companies can use websites that JETRO has built to introduce their products and seek information about desired partners when they intend to carry out international transactions. The programme now has more than 40,000 customers registered from 170 countries.
Remarking on tariff transparency, Atsusuke Kawada pointed out, “It is necessary to use HS Code to prevent different interpretation of customs and end acts of demanding irrational unofficial fees. I hope that Vietnam will concentrate on solving these issues.”
Bright spot in agricultural export
In 2015, Vietnam’s exports to Japan declined 3.9 per cent to US$14.1 billion, while its imports from Japan rose 11.3 per cent to US$14.4 billion. In the five years since 2010, Vietnam ran a trade deficit with Japan but the different value was not high. Atsusuke Kawada attributed Vietnam’s export decline to a crude oil export drop by 23.4 per cent in volume and 60.4 per cent in value.
Vietnam’s key exports to Japan included garments and textiles (US$2.8 billion), automotive and machine metal cables (US$1.9 billion), seafood (US$1 billion), and footwear (US$600 million). Meanwhile, its imports from Japan were machinery, tools and components (US$4.5 billion), electronic devices, computers and parts (US$2.3 billion), steel and steel scrap (US$1.8 billion), and automotive components (US$700 million).
Agricultural products are of major concerns of the two countries. Atsusuke Kawada said, during the working visit to Japan by Party General Secretary Nguyen Phu Trong in September 2015, the two sides agreed to lift the ban on mango import from Vietnam and apple import from Japan. The objective of the Japanese Government, by 2020, is to bring food export to 1,000 billion yen and JETRO is making efforts to help the Japanese government to realise this goal by supporting food, seafood and agricultural product export. Specifically, JETRO has cooperated with AEON Mall Long Bien, opened last October, to organise events to advertise Japanese apple at this supermarket.
The JETRO Chief Representative in Hanoi said lifting the ban on mango imported from Vietnam is a huge opportunity for Vietnam to boost mango export to Japan. “As far as I know, apart from mango, Vietnam is also seeking to export other fruits like dragon fruit and litchi to Japan. JETRO will support trade promotion agencies concerned to organise Vietnam Foodexpo in Ho Chi Minh City in November 2016. Deep in my heart, I hope that Vietnam and Japan will expand and accelerate trade in agricultural products,” he added.
Huong Ly
Vietnamese
