The golden jubilee of constantly strengthening Vietnam-Japan relations marks an “outstanding success story” scripted by Vietnamese diplomacy, says Prof. Nguyen Mai, chairman of the Vietnam's Association of Foreign Invested Enterprises (VAFIE).
Mai was speaking to The Investor soon after Vietnamese President Vo Van Thuong and Japanese Prime Minister Kishida Fumio announced Monday the elevation of bilateral relations to that of a comprehensive strategic partnership.
The former Vice Chairman of the State Committee for Cooperation and Investment (now the Ministry of Planning and Investment) noted that there has been no disruption in the bilateral relationship for five decades, even during the U.S. embargo and the Covid-19 pandemic.
“Bilateral relations are friendly, equal and comprehensive, ranging from investment and trade to official development assistance (ODA), security-defense and support on South China Sea issues at international fora,” he said.
Opening a new development door
He noted that Japan was the first Group 7 (G7) nation to recognize Vietnam as a market economy in 2011, opening a new door for its socioeconomic development.
Unlike former trade and economic practices with socialist countries before the collapse of the Soviet Union, cooperating with Japan boosted Vietnam’s economy with access to capital, advanced technologies and knowhow.
Japan was the first country to have large-ticket foreign direct investment (FDI) projects in Vietnam, with two significant examples being Toyota and Honda. Their plants in Vinh Phuc province, adjacent to Hanoi, have not only churned out vehicles in Vietnam but also for export to other ASEAN countries.
“With a large number of spare parts produced in Vietnam, Honda has created a global supply chain in motorbike manufacturing, helping us deepen our participation in the global value chain, and serving as an example for domestic firms to follow,” Mai said.
He further listed several benefits that Vietnam has enjoyed from its partnership with Japan in the fields of oil and gas exploitation, semiconductors, electronic devices and household appliances.
“All this has contributed to Vietnam’s industrial and information technology development, helping turn Vietnam from an underdeveloped country to one with an IT industry comparable with Singapore’s,” he said.
Besides helping Vietnam build modern infrastructure works, Japanese businesses have invested in green growth and sustainable projects that fit Vietnam’s needs including office space, five-star hotels and industrial parks.
“Those projects have aligned with Vietnam’s FDI attraction orientation in each period, contributing greatly to Vietnam’s transformation from an agriculture-based to an industrialized nation,” Mai said.
He noted that Japan has been Vietnam’s biggest ODA donor. “Japan stands ready to provide ODA loans to help Vietnam secure a green and energy efficient growth path and fulfil its 2050 net zero commitment.”
Crucial SME links
“Besides big corporations, Japanese small and medium-sized enterprises (SMEs) are eager to do business here. As SMEs account for 97% of businesses in Vietnam, Japan’s assistance in this area is suitable and necessary.”
Mai highlighted the trend of hundreds of Vietnamese companies hiring Japanese experts, many of them retired, to take executive positions.
With Japanese capital and expertise invested in Vietnamese banks, both state-controlled and privately-run, through M&A deals and other means, many Vietnamese partners have accelerated application of new technologies including fintech, blockchain and digital banking.
In the area of urban development, Japanese firms have not only acquired ailing projects but also partnered with Vietnamese ones to jointly develop many projects.
In the retail sector, Aeon has become a widely recognized name in Vietnam. The Japanese giant has built several modern shopping centers in Vietnam. It has also exported Vietnamese farm produce and other products to its outlets in Japan and neighboring countries without intermediaries, helping increase the presence of Vietnamese goods.
“Aeon will become the largest retailer in Vietnam in the future,” Mai predicted.
In the manufacturing sector, Japan has brought cutting-edge technologies to Vietnam and transferred them to local partners. This has enabled state-run energy giant Petrovietnam achieve the same level of development as Malaysia’s Petronas, he said.
Vietnam and Japan established diplomatic relations in 1973 and a bilateral strategic partnership in 2009. They upgraded ties to an extensive strategic partnership in 2014, before elevating it to the highest level of comprehensive strategic partnership this month, on par with China, Russia, India, South Korea and the U.S.
Today, around 520,000 Vietnamese nationals live in Japan and about 23,000 Japanese nationals reside in Vietnam.
Japan’s registered FDI in Vietnam fell 32.5% year-on-year to $3.1 billion between January and November 20, 2023. So far, Japan has invested an accumulative $71.53 billion in Vietnam, ranking third among 143 investing countries and territories, according to official data.