Vietnam ranks second among 'promising' countries for Japanese manufacturers: JBIC

Vietnam has been ranked second among the most "promising" countries for overseas business over the medium-term (next three years), according to a survey conducted by the Japan Bank for International Cooperation (JBIC) among Japanese manufacturers.

In the 35th edition of JBIC’s "Survey report on overseas business operations by Japanese manufacturing companies" reviewing 2023, Vietnam recorded a score of 30.1, higher than 28.9 in 2022. India remained the top destination, scoring 48.6 versus 40.3 in 2022.

Commentating on the survey results in March, JBIC said India appears to be moving away from its “image-driven” evaluation as a promising country.

Vietnam, which is expected to benefit from the de-China trend, ranked second for the first time, but the ratio of business planning in Vietnam by Japanese manufacturers (31.8%) was the lowest among the top 10 countries, suggesting that it may be "image-driven", JBIC added.

Vietnam overtook China and the U.S. to jump two ranks. China dropped from second place to third, as its score fell from 37.1 in 2022 to 28.4 in 2023. The U.S. lost one position after its score fell to 27.1 in 2023 from 32.2 in 2022.

JBIC stressed the biggest issues in Vietnam are rising labor costs, unclear execution of the legal system, intense competition, and difficulties in securing management staff and technical/engineering staff. "However, all of the issues are below 40%, and there are no outstanding issues," the bank said.

In terms of promising reasons, affordable labor and qualified human resources have improved. Some firms are positioning Vietnam as a production base alternative to China.

Vietnam had attracted foreign direct investment (FDI) of $475.83 billion in 39,758 projects as of end-March, according to the Ministry of Planning and Investment. Japan was the third-biggest investor, with 5,304 projects and registered capital of $74.38 billion.