VN is the most promising investment destination in 2020: Japanese firms

11:27:25 AM | 2/11/2020

Viet Nam has been unanimously voted by Japanese companies as the most promising Asian investment destination in 2020, placed above India and other countries in Southeast Asia.

In 2019, the foreign-invested sector continued to be a bright spot in Viet Nam’s economic picture, with a total investment capital of US$38 billion and a record high disbursement rate at US$20.4 billion.

Notably, Japan was the second largest foreign investor in Viet Nam with 4,385 projects totally worth roughly US$59.34 billion.

Many Japanese enterprises have been “rooted” to the Vietnamese economy, including Toyota, Honda, Panasonic, Canon and Sumitomo.

FDI pledges for new projects, capital supplements and stake acquisitions in Viet Nam rose 7.2 percent year-on-year to $38 billion in 2019, marking a 10-year high, according to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment.

At the Viet Nam M&A Forum 2019 has recently held, Tamotsu Majima, senior director of Japan's leading M&A advisory service company RECOF Corporation, said that the number of transactions by Japanese enterprises in Vietnam had reached a record high number. In the past four years, there were about 20-25 transactions each year, but the figure hit 21 transaction alone last July.

Majima added Japanese companies were increasingly interested in Vietnam, especially in the fields of production and services, partly because the two economies are becoming closer. In recent years, more and more Vietnamese people travel to Japan and vice versa. Besides, Vietnamese people have also taken part in Japanese economic activities, while the Japanese are getting used to employing Vietnamese workers.

Masataka Sam Yoshida, RECOF's senior managing director, added the U.S. – China trade war is one of the main reasons for Japanese investors to turn to Viet Nam.

Besides, Viet Nam’s high economic growth also attracts more Japanese enterprises to invest in the fields of consumption, goods and many other industries. Yoshida referred to some notable deals, such as Taisho Pharmaceutical with local DHG Pharmaceutical, Misui Corp buying stake at Minh Phu seafood, or Sumitomo looking for Gemadept’s shares, among others.

Japanese investment gradually expands with large projects

Not just industry, Japanese investors have been increasingly “penetrating” in other fields such as retail, finance-banking and food, with the presence of “retail giants” AEON and Uniqlo, or Mizuho’s purchase of shares at Vietcombank and Sumitomo Mitsui Banking holding shares at Eximbank.

This fact proves that Japanese investment is gradually expanding and extensively present in the Vietnamese economy.

According to a survey conducted by NNA Japan, Viet Nam was voted by Japanese enterprises as the most promising Asian investment destination in 2020, surpassing both India and other countries in Southeast Asia.

In 2020, the Vietnamese Government is interested in improving national competitiveness and renovating the investment and business model with the goal of climbing 10 places in the global rankings on the business environment.

Therefore, in addition to participating in the development of the development strategy for the next 10 years, the Government is proposing the National Assembly to amend the Law on Investment and the Law on Enterprises aiming to institutionalize the Politburo’s Resolution No. 50-NQ/TW.

Accordingly, the Government reaffirms that the foreign-invested economic sector is an important component of the Vietnamese economy, and is encouraged and facilitated for long-term development, cooperation and healthy competition with other economic sectors.

The State respects and protects the legitimate rights and interests of investors, and ensure harmony of interests between the State, investors and employees in enterprises.

At the recent Japan-Viet Nam economic, tourism and labor forum, Deputy Prime Minister Vuong Dinh Hue affirmed Viet Nam’s willingness to create favorable conditions for investors, including those from Japan, emphasizing that the Vietnamese government not only wants Japan to be the leading investor but also the best investor in Viet Nam.

On a broader scale, Viet Nam is a member of the Mekong Sub-region which has already agreed to cooperate with Japan in three connections: transport infrastructure and energy, soft infrastructure on institutions and trade-investment facilitation, and human connectivity associated with digital connectivity. These are also the three focuses of Viet Nam-Japan cooperation in the near future.

According to a report of the Japan External Trade Organization (JETRO), in 2019, 66% of Japanese enterprises investing in Viet Nam reported profits, while 64% of the companies revealed their plan to expand their businesses activities in the Southeast Asian country.

 Source: VGP