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JETRO: 70% of Japanese companies wish to expand in Vietnam

Released at: 20:20, 07/02/2018

JETRO: 70% of Japanese companies wish to expand in Vietnam

Photo from vov.vn

Latest survey from Japan External Trade Organization shows figure up against 66.6% in 2016.

by Quang Huy

Nearly 70 per cent of Japanese businesses operating in Vietnam last year considered expanding operations, an annual survey conducted by the Japan External Trade Organization (JETRO) found.

After coming in at 66.6 per cent in 2016, the figure is higher than in regional countries such as the Philippines, Indonesia, and China, indicating Vietnam’s attractiveness as an investment destination.

According to the survey, “rising revenue” and “high growth potential” were the most important factors encouraging expansion plans in Vietnam.

The survey also revealed that 65.1 per cent of Japanese companies said they recorded a profit in Vietnam last year, up 2.3 percentage points from the previous year, while 19.4 per cent reported losses, down 5.7 percentage points.

Proportion of surveyed Japanese companies planning to expand operations. Image: JETRO

Vietnam appeals to Japanese businesses thanks to “market size/growth potential”, “socio-political stability”, and “low labor costs”, according to the survey. More companies were upbeat about the country’s market outlook.

Meanwhile, fewer Japanese companies chose “socio-political stability” than in 2016, at 61.8 per cent versus 64.3 per cent; far behind countries such as Singapore, New Zealand and Australia.

Vietnam remained at the bottom among 15 surveyed countries in terms of language barriers.

Japanese firms also voiced concern over a number of lingering risks in Vietnam, though three of the top five factors saw improvements. The major risks continued to be rising labor costs, unclear legal framework and vague implementation, incomplete infrastructure, and tax complications.

In addition, fledgling support industries still have Japanese companies worried, as Vietnam ranked fourth among 15 countries, unchanged from the previous year.

Mr. Hironobu Kitagawa, Chief Representative of JETRO Hanoi, however, noted that Japanese companies were not discouraged by those risks. “Vietnam remains an attractive investment destination for Japanese firms,” he said.

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