56.1% of Japanese firms target expansion in Vietnam: survey

As many as 56.1% of Japanese firms aim to expand their activities in Vietnam in the next one to two years, reflecting their stable business confidence, according to a survey of the Japan External Trade Organization (Jetro) for fiscal year 2024.

The figure went down 0.6 percentage points year-on-year, but it is above the ASEAN average of 46.3% and the Asia-Pacific average of 43.8%.

Besides, the survey, featuring 5,007 Japanese firms as respondents, showed that 40.7% of the companies projected stable operations, 2.8% aimed for lesser activities, and only 0.3% planned withdrawal from Vietnam.

Notably, 48.1% of manufacturing-processing firms target expansion in Vietnam, with the highest percentages belonging to sub-sectors of food at 79.2%, chemicals-pharmacy at 72.7%, electricals-electronics at 65.4%, and precision-medical items at 57.1%.

They attributed the expansion to Vietnam’s advantages of growing export activities with 60.7%, expanding domestic demand with 54.5%, the market’s consumption of high-value-added products with 15.2%, and strong competitiveness versus competitors with 14.7%

The survey found that businesses expect a wage hike of 5.3% in 2025 versus 5.4% in 2024. The figure for Vietnam is similar to the annual growth of 5% in 2021. It is also the second-highest increase in the region, only behind India with 9.3% and far higher than the Philippines as third placer with 4.9%.

The ratio of enterprises expecting profit in 2024 is 64.1%, up 9.8 percentage points year-on-year. This is the first time in five years since the Covid-19 pandemic that the ratio has exceeded 60%. However, this tally is lower than the ASEAN average of 65.2%.

In the manufacturing industry, the figure is 70.2%, up 8.7 percentage points year-on-year, while the ratio of enterprises expecting losses is 17.4%, down 4.6 percentage points.

In the non-manufacturing industry, the ratio of firms expecting profits is 57.9%, up 11.2 percentage points year-on-year, while the ratio of those reporting losses is 21.2%, down 5.8 percentage points.

The figure of enterprises expecting profits in some sub-sectors like trade/wholesale and mining/energy increased by more than 15 percentage points. However, the ratio in the areas of education, healthcare and construction continued to remain below 50%.