60% of Japan businesses eye expansion in Vietnam

Sixty percent of Japanese firms plan to expand their businesses in Vietnam in the next one-two years, up by 4.7 percentage points year-on-year, Takeo Nakajima, chief representative of Japan Trade Organization (Jetro) in Hanoi, quoted its 2022 survey as indicating.

Such a rate is the highest among ASEAN nations and only lower than India with 72.5% and Bangladesh with 71.6% in Asia and the Pacific, the Japanese official said to Minister of Planning and Investment Nguyen Chi Dung at a meeting early this week.

Only 1.1% of companies seek to withdraw or reduce its Vietnam operations, he added.

The survey, featuring 603 Japanese firms in Vietnam, also pointed out that 59.5% of Japanese businesses anticipated profits in 2022, up by 5.2 percentage points year-on-year; while only 20.8% expected losses, down by 7.8 percentage points.

Regarding the profit prospects, 47.6% and 22.6% of firms responded with improvements and reductions for 2022, respectively. The 2023 figures are 53.6% and 6.9%, respectively.

The Jetro chief representative attributed such positive figures to the Vietnamese market’s growing exports and high potential.

In reply, Minister Dung affirmed Vietnam is striving to improve its business environment to attract more foreign companies, particularly Japanese ones. He also urged Jetro to encourage Japanese firms to help boost the capacity of Vietnamese firms, conduct technology transfer, and promote innovations and research & development in Vietnam.

Takeo Nakajima later had a meeting with Deputy Minister of Industry and Trade Do Thang Hai to discuss further cooperation. He proposed Vietnam ameliorate its administrative procedures and tax policies to facilitate Japanese firms.

Nakajima also suggested the Southeast Asian nation improve vocational schools in sectors of industry and technology, rural workforce, the legal framework on innovation, small and medium enterprise access to information related to investments in localities, and more dialogue between government agencies and businesses.

In reply, Hai said the Ministry of Industry and Trade is willing to streamline administrative procedures, policies, workforce; and cooperate with Jetro in raising the localization rate in the industrial sector.

Japan was the third-biggest foreign investor in Vietnam as of end 2022 with 4,978 projects and the total registered capital of $68.9 billion, according to the Ministry of Planning and Investment. The top two are South Korea with 9,534 projects worth $80.97 billion and Singapore with 3,097 projects worth $70.85 billion.

In the lastest move, three Japanese firms in January discussed investments in Song Khoai Industrial Park of the northern province of Quang Ninh. Tenma Corporation plans to invest $150 million in constructing an 18-hectare plastic molding plant. Castem Co., Ltd aims to invest $14 million in building an 18-hectare plastic molding plant. Yaskawa Electric Corporation targets to invest $100 million in building a 12-hectare factory there.