Japanese investment into Vietnam sees increase

In the past few years, investment wave from Japan into Vietnam has ceaselessly increased in both number of enterprises and capital volume with roughly 1,800 Japanese enterprises and total investment of US$9.5 billion across the country by the end of 2018, of which nearly 1,000 Japanese enterprises are in Ho Chi Minh City.

Semiconductor production at MTEX Company. (Photo: SGGP)
Semiconductor production at MTEX Company. (Photo: SGGP)
According to the Japan External Trade Organization, Vietnam’s consumer market has great potential with young population and increasing trade growth which are favorable conditions for Japanese firms to expand market. In fact, several Japanese firms have invested or expanded investments in Vietnam lately with investment fields varying from food processing, agricultural-forestry-aquaculture produce processing, consumer goods, electronic components manufacturing to industrial equipment manufacturing, construction, transportation and environment. Not only large enterprises, but small and medium Japanese enterprises currently have also promoted investments into foreign countries.
Japanese firms have received support from the government and Japanese organizations to promote their goods into global markets. For instance, JETRO has covered advertising cost, provided information and helped Japanese firms to connect with Vietnamese investors, creating good conditions for Japanese firms to operate in Vietnam. This is a part of a program to help Japanese firms, especially small and medium firms to increase export to global market. There are around 70 percent of Japanese firms in Vietnam having pledged to continue to expand investment and business. The high ratio compared to other countries shows that Vietnam remains an important investment destination.
Representative from Keio Denka Kougyou Company in the pressure casting and plating said that it came to Ho Chi Minh City with the hope to look for partners to cooperate in pressure casting, polishing plated products, electronic components, semiconductors and interior automobile parts.
Funatech Company in water treatment field is also looking for partners, distributors and sellers who are capable of maintaining ultraviolet water purification system and other water-treatment-related products.
Tsukasa Company in packing designing is also searching for partners in Vietnam to produce, design and print all kinds of glass and wooden packaging.
Mr Takimoto Koji, the representative of JETRO in HCMC, said that Japanese firms had pointed out three advantages when investing in the country. The first advantage is that the country has a stable politics and society. Secondly, Vietnam’s market has great growth potential. Lastly, labor cost here is cheap. However, Mr Takimoto Koji said that the Government as well as Vietnamese firms should focus on training and developing human resource because in the future application of robots into manufacturing is inevitable, then factories will need high-quality human resource to control robots. At the same time, infrastructure development should be paid more attention, especially transport and energy.
Mr Vo Tan Thanh, director of the Vietnam Chamber of Commerce and Industry HCMC Branch, said that the country has been heavily reforming in order to attract investment and supporting investors in every field, including information technology, infrastructure, factories, administrative procedures and tax reduction. In addition, the Government has carried out solutions to improve investment environment to lure more foreign firms to invest in Vietnam.
Mr Thanh also suggested that in order to establish lasting cooperation with Japanese firms, Vietnamese ones should strongly invest in science and technology to improve product quality, upgrade and change to more effective workflow. It is essential to deal with late delivery, he said. In addition, Vietnamese firms should work together to meet the demand for materials of Japanese firms.
Trade relation between Vietnam and Japan has seen rapid growth in the past years. Japan is the fourth largest trade partner of Vietnam after China, the US and South Korea; the third largest export market after the US and China; and the third largest import market after China and South Korea. Both countries are expecting trade turnover to reach $60 billion in 2020.

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