Over 64% of Japanese firms in Vietnam expect profit in 2024: Jetro survey

Up to 64.1% of Japanese companies in Vietnam expected to make profits in 2024, up 9.8 percentage points from the previous year, according to a survey by the Japan External Trade Organization (Jetro).

This is the first time in five years that the ratio has exceeded 60%, Haruhiko Ozasa, chief representative of Jetro Hanoi, said at a press meeting announcing the results of the survey on Tuesday.

The survey on the business conditions of Japanese companies abroad for fiscal year 2024, conducted from August to September 2024, gathered responses from 5,007 Japanese companies across 20 countries and territories in the Asia-Pacific region, including 863 in Vietnam.

However, the ratio was lower than the ASEAN average of 65.2% for the fourth consecutive year, but the gap narrowed from 6.3 percentage points in fiscal year 2023 to just 1.1 percentage points in fiscal year 2024, Ozasa noted, adding the proportion before 2020 was consistently lower than the ASEAN average.

According to the Jetro representative, the majority of Vietnam-based Japanese enterprises under the survey showed positive responses.

Among manufacturing companies, 70.2% anticipated profitability in 2024, up 8.7 percentage points from the previous year. This improvement is primarily attributed to increased demand in export markets and the domestic market.

Meanwhile, 57.9% of non-manufacturing companies expected to turn a profit in 2024, up 11.2 percentage points from last year. The main reason cited by these companies for their improved profit outlook is also the increased demand in export markets and the domestic market.

Moreover, 48.8% of Japanese companies in Vietnam predicted that their business performance in 2024 would improve compared to 2023, up 16.8 percentage points from the previous year.

Vietnam has the highest increase in the percentage of businesses predicting an improvement year-on-year in the ASEAN region, Ozasa said, adding for three consecutive years, Japanese businesses have maintained a positive outlook on Vietnam.

About 56.1% of Japanese businesses in Vietnam revealed plans to “expand” their operations in Vietnam over the next 1-2 years.

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%.

The rate in Vietnam is significantly higher than that in other countries in the region, such as the Philippines (52.1%), Malaysia (48.9%), Indonesia (47.3%), and Singapore (42.5%).

Specifically, manufacturing companies accounted for 48.1%, an increase of 1 percentage point from the previous year, while non-manufacturing companies made up 63.2%, a decrease of 2.3 percentage points.

However, 2.8% of respondents stated they would “downsize” their operations, a rise of 1 percentage point from the previous year, while only 0.3% indicated plans to “withdraw or relocate to a third country,” a decrease of 0.4 percentage points.

Such surveys are conducted annually by Jetro since 1987, aimed at capturing the actual operating conditions of Japanese companies in Asia and the Pacific region.

The surveys target Japanese businesses investing in 20 countries/regions, including five in Northeast Asia, nine in ASEAN, four in Southwest Asia, and two in the Oceania.