Latest JETRO survey indicates widespread interest among Japanese investors in bolstering their investment in Vietnam.
More than 60 per cent of Japanese enterprises in Vietnam plan to expand their business and continue to view the country as an important investment destination, Mr. Atsusuke Kawada, Chief Representative of the Japan External Trade Organization (JETRO) in Hanoi, told a conference held to release the “Investment Situation of Japanese Enterprises in Vietnam 2016” report on February 14.
“The main reason for business expansion is that enterprises want to increase revenue,” he said. “For non-manufacturing businesses, the main driving force is high growth potential.”
Some 62.8 per cent of the more than 600 businesses participating in the survey said they are profitable, up 58.8 per cent compared to 2015 and higher than in Thailand and Indonesia but lower than in the Philippines and China.
Mr. Kawada also emphasized that there is a wave of agri-businesses seeking investment opportunities in Vietnam. “Japan is aging while demand for food remains high,” he said. “Vietnam, with its young population and favorable climate for agriculture, is therefore an ideal destination for agri-investors from Japan.”
Japanese businesses appreciate the political and social stability in Vietnam and consider it the greatest advantage in its investment environment. Rising labor costs, meanwhile, is the leading obstacle for many Japanese enterprises, with a response rate of 58.5 per cent, up 3.9 per cent compared to 2015.
Ability to localize production in Vietnam improved over the previous year, increasing to 34.2 per cent of respondents, but remained lower than in China (68 per cent) and Thailand (57 per cent). JETRO said that Vietnam needs to further increase local content to reduce production costs.
Mr. Kawada added that Japanese investors in Vietnam are mainly small and medium-sized enterprises. They tend to pour money into non-manufacturing sectors, leveraging the workforce in Vietnam as their country’s population ages. While investment in manufacturing fell 12 per cent, the retail distribution sector and consultancy increased 10 per cent against 2015.
This is the 30th JETRO survey on the production and business activities of Japanese companies in Asia and Oceania. The survey was carried out in October and November, with the participation of more than 4,600 businesses in 20 countries and regions, including 639 in Vietnam.