A number of positive signs are emerging from the trend in which Japanese firms look to shift their investment to Southeast Asian countries, including Vietnam, with many viewing the country as one of the most attractive investment destinations across the region.
Tanimoto Masanori, mayor of Ishikawa prefecture (first right), and VCCI representatives at a recent meeting.
Over half of the Japanese firms surveyed by Ishikawa prefecture confirmed that they have planned to move their production bases to Southeast Asian countries instead of continuing their investments in China. Of which, Vietnam has emerged as a reliable investment destination.
Tanimoto Masanori, the mayor of Ishikawa prefecture, made the statement at a recent meeting with representatives of the Vietnam Chamber of Commerce and Industry.
Many queried firms have placed importance on making investments in the Vietnamese market as they appreciate the hard-working spirit of Vietnamese workers, the mayor quoted their comments as saying.
According to a report released by the Japan External Trade Organization in Hanoi in early 2019, up to 70 per cent of the reviewed Japanese firms voice their hope to expand their production in Vietnam.
In fact, Japan topped the list of foreign investors in Vietnam with its foreign direct investment (FDI) reaching nearly US$8 billion in 2018. Japanese FDI accounted for 31 per cent of the total FDI inflows into the Southeast Asian country.
2018 is the third consecutive year in which Vietnam attracted a record level of Japanese FDI with 630 projects. It is also the fourth consecutive year which saw an increasing number of Japanese companies enlarging their production in the country.
The Mekong Delta has grown into a magnet for Japanese FDI. As of last October, the region had lured 169 FDI projects with a total registered capital of US$2.2 billion, 10.5 per cent of combined FDI inflows into the region. Can Tho city in particular had attracted seven Japanese-invested projects, totally valued at US$12 million.
Nguyen Phuong Lam, head of the VCCI branch in Can Tho, noted that Japan enjoys considerable advantage in cutting-edge technologies which could serve as an effective supplement to the Mekong Delta’s agricultural production as the region inclines towards boosting the sustainability of agricultural production coupled with increasing high-tech application.
Among nationwide regions, the Mekong Delta has enjoyed the highest economic growth with an annual average growth rate of 7.8 per cent. The processing of agro-aquatic products has remained as a major contributor to the region’s economic growth while half of the region’s shrimp exports are regularly shipped to Japan, Lam added.
He noted that the increasing interest from Japanese investors into the Mekong Delta represents a positive signal for the overall economic outlook.
A promising outlook lays ahead for cooperation between the Mekong Delta and Japanese investors. Potentially, both sides are looking to build an area dedicated to producing safe agricultural products and those for export.
Can Tho city was mentioned as a good example that have managed to offer a number of investment incentives aimed at luring FDI from Japan. The Vietnam - Japan Friendship Industrial Park, which covers at least 30 hectares in Cai Rang district, serves as a boost to the attraction of FDI inflows.
Okamoto Akihiro, owner of an agricultural firm in Japan, highlighted the Mekong Delta’s advantage in maritime resources, fertile soil, and minerals. Therefore, a slew of Japanese firms are eyeing investment and business opportunities in Can Tho city and the Mekong Delta at large.
Vo Tan Thanh, Vice Chairman of the VCCI, said that the country has been striving to maintain its stable and favourable investment climate for foreign investors, including those from Japan, amidst escalating US-China trade frictions.
“It’s high time to make investment in the Vietnamese market as the Government has been making determined efforts to enhance administrative reforms and create favourable conditions for businesses”.
As a result, more than 50 per cent of the total conditional business lines have so far been eliminated, Thanh said, citing remarks made by the World Bank as saying that the domestic business climate has made progress in the past time.