Viet Nam News

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Almost half of all Japanese firms plan to expand investment in VN

Almost 47 per cent of Japanese enterprises plan to expand their business in Việt Nam in the next one to two years, a survey by the Japan External Trade Organisation on business conditions of Japanese companies in Asia and Oceania has found.

Announcing the survey results in HCM City on Monday, Hirai Shinji, chief representative of JETRO in HCM City, said the ratio is lower than in the previous year, but still only ranks fourth in the region behind Pakistan, India and Myanmar.

They want to expand in Việt Nam since their revenues are growing from both local sales and exports, and the market’s high economic growth and huge potential.

Besides expanding local sales, they also eye increased exports to Japan, ASEAN, the US, and China.

Some 49.6 per cent of the businesses were profitable in 2020, a 16.2 percentage point fall, while 30.1 per cent incurred losses, up 9.9 percentage points.

“Like elsewhere in the region, Japanese businesses in Việt Nam were also affected by the Covid-19 pandemic, and their profit fell. But the decline were low [compared to place like] Indonesia, the Philippines and Thailand.”

Asked about future development, many firms in the manufacturing sector said they plan to review their procurement due to changes in the global supply chain as a result of the pandemic and changes in the global trade environment, with 18.8 per cent preferring suppliers in Việt Nam compared to 12.9 per cent in China, 9.3 per cent in Thailand and 8.3 per cent in Indonesia.

Many also plan to reassess where they manufacture, with Thailand being their top choice followed by Việt Nam.

Japanese firms appreciate the growth potential of the Vietnamese market, its stable social and political situation and low labour cost, the survey said.

But they mentioned risks such as rising labour costs and tortuous administrative procedures and tax regulations.

The survey also showed that Japanese companies have increased purchases of raw materials in Việt Nam to 46.1 per cent, the same as Malaysia but low compared to China, Thailand and Indonesia, he said.

Besides, many Japanese firms want to enhance co-operation with Vietnamese start-ups.

The survey was carried out in September and October last year, with the participation of nearly 6,000 businesses in 19 countries and regions, including 905 in Việt Nam, the highest number in a single country. — VNS