On July 11, 2006, the Vietnamese Minister of Planning and Investment Vo Hong Phuc and the Japanese Ambassador to Vietnam Norio Hattori signed an agreement to extend the Vietnam Japan Joint Initiative to the second phase in a bid to improve the investment environment in Vietnam.
The Vietnam Japan Joint Initiative (VJJI) was adopted by Japanese Prime Minister Junichiro Koizumi and former Prime Minister Phan Van Khai in April 2003 with the aim of increasing investment inflows into Vietnam from other countries. After two years, the first-phase Vietnam Japan Joint Initiative has wrapped up and been assessed a success because it has reached basic objectives of bettering business environment in Vietnam as well as increasing the country's competitiveness.
The Ministry of Planning and Investment asserted that this initiative has played an important role in raising foreign direct investment capital sources from Japan into Vietnam in recent years. This is the major momentum for the extension of the second phase of this initiative.
Many requirements to better investment environment
The Action Plan to carry out the second phase Vietnam Japan Joint Initiative signed between the two countries reaffirmed two-side requirements and efforts in improving shortcomings in attracting investment.
According to the new plan, Vietnam is required to continue amendments to regulations on the decision-making powers of the directors’ board in joint venture companies, regulations on feasibility study reports, regulations on parts and import reporting mechanism.
In addition, the Japanese side advised Vietnam to resolutely resolve the currently burning strike issue. Japan also put forward technical requirements including balance-sheet mechanisms and maximum overtime hour increases.
Notably, this plan proposed that Vietnam must consult with the Japan Business Association on tax-related issues.
Also at this session, the Japanese side pledged to continue providing small technical supports and big ODA loans for Vietnam. However, to receive ODA loans, Vietnam must pledge to import Japanese equipment.
As regards the working group for implementation of the initiative, in the first phase, the working group comprised of representatives from the two governments, the relevant organisations, and the Japan Business Association. However, in the second phase, Vietnam proposed to supplement Vietnamese enterprises via introduction of the VCCI but the Japan wished to keep the working mechanism unchanged. The disagreement is under negotiation.
Investment cooperation attraction sample In a recent exchange talk, the Foreign Investment Department forecast that Japan would possibly become the largest investor in Vietnam in the coming time. One major momentum for this great prospect has been the success of the Vietnam Japan Joint Initiative. Hence, this initiative can be taken as an exemplary model for foreign investment cooperation and attraction.
Meanwhile, Ambassador Norio Hattori also highly appreciated the results of the first phase initiative and hoped the second phase would be also highly successful. He said, many countries also want to have the joint initiative with Vietnam but only Japan has been successful to date
Regarding results in the first phase, after more than two years, 125 issues were put forward and 105 of them were successfully resolved.
Successful issue settlement has helped improve the investment environment in Vietnam. In fact, recent foreign investment inflows into Vietnam have doubled while the capital flows from Japan have trebled, principally due to this initiative.
Thanks to these successes, Vietnam and Japan began discussing over the extension of the initiative immediately it finished in late 2005. The working groups have strived to produce a best plan in a hope to boost a stronger investment wave from Japan into Vietnam.
Japan has invested in over 600 projects with a total registered capital of over US$6.5 billion in Vietnam, becoming the third largest foreign investor in Vietnam after Taiwan and Singapore. In 2005 alone, Japan expanded 107 projects and invested in 106 fresh projects with a combined registered capital of US$ 913 million. Japan mainly poured its money into the industrial sector with a total registered capital of US$5.5 billion.
Phuoc Ha
Vietnamese
