Avoiding economic disruption key for Vietnam to stay competitive: JETRO

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Nguyen Tung 21:43, 2021/12/02

Prime Minister’s Pham Minh Chinh visit to Japan has been a timely assurance of the country’s determination to be a solid investment destination.

Chief Representative of the Japan External Trade Organization (JETRO) in Hanoi Takeo Nakajima told The Hanoi Times his view on the Vietnam-Japan economic relations and what Vietnam should focus on to remain attractive in the eyes of foreign investors.

Chief Representative of the Japan External Trade Organization (JETRO) in Hanoi Takeo Nakajima

What is your view on the progress of economic and investment cooperation between Vietnam and Japan over the years?

For Vietnam, Japan is the second-largest source of direct investment and the fourth-largest trading partner. For Japan, Vietnam is the seventh-largest trading partner. It ranks first in the number of members of the Japan Chamber of Commerce and Industry in an ASEAN country. Currently, 440,000 Vietnamese live in Japan, making up the second-largest expat community after the Chinese.
The data shows Japan-Vietnam relations are exceptionally well in terms of economic and personnel exchanges.

What is the role of Vietnam in the business/investment activities and supply chains of Japanese companies, and how would this trend evolve in the future amid the pandemic?

Vietnam is a crucial supply chain hub for Japanese global business and manufacturing. Before the fourth wave of COVID-19, when Vietnam minimized the negative pandemic impact, many Japanese enterprises looked at Vietnam as a safe investment. About 2/3 of the projects in JETRO/METI [Ministry of Economy, Trade, and Industry]'s subsidy to support diversification of supply chains for Japanese manufacturers targeted Vietnam.

However, the fourth wave changed the picture. From June to September 2021, the global supply chain was disrupted and disturbed "from Vietnam." There was a tremendously adverse effect on Japan, particularly on the automotive, electronics, and machinery industries.

Vietnam is reopening its economy, what are the expectations and recommendations from Japanese companies for Vietnam to remain a preferred destination for foreign firms in general and Japan in particular?

Post-corona policy is crucial for Vietnam. It is necessary to send the message "we will not stop the economy" to the world, including Japan.

Japanese companies are also looking to invest in neighboring countries other than Vietnam. In a recent JCCH [Japanese Chamber of Commerce and Industry]/JETRO Ho Chi Minh survey, 13% of respondents said they had "transferred production from Vietnam to another country or are considering it." Whether this trend is temporary or not remains to be seen.

What are the highlights of Prime Minister Chinh's visit to Japan and its impacts on the future bilateral economic cooperation? What is JETRO's plan to further contribute to such cooperation?

PM Pham Minh Chinh's visit to Japan is very timely, considering the situation mentioned above. PM Chinh delivered a clear message that Vietnam is a solid investment destination, where the "new normal" and "with corona" policy is in effect. PM Chinh emphasized Japan and Vietnam would enhance cooperation in developing human resources, legal systems, infrastructure, and innovation.

JETRO and Vietnam’s Ministry of Planning and Investment co-hosted the "Vietnam-Japan Investment Conference" in Tokyo on November 25. It was an unprecedented event for JETRO because, during the two years of COVID-19, most of the international events have been held online. This conference gathered more than 200 Japanese and Vietnamese business people and 800 international participants online.

JETRO's roles here are clear. We foster a more profound and closer economic relationship between the two countries. Investment promotion, business matching, and research are core activities by JETRO to focus on digital/IT, manufacturing, agriculture, retail, and other service industries.

Thank you for your time!

Foreign Direct Investment (FDI) commitments during the 11-month period rose by 0.1% year-on-year to US$26.46 billion, a positive result amid severe Covid-19 impacts.

Year to November 20, nearly 1,600 new projects have been approved with total registered capital of $14.1 billion, down 31.8% in the number of projects but up 3.76% in capital year-on-year, while foreign investors injected over $8 billion in existing projects, up 26.7%.

Investors have poured money into 18 fields and sectors, in which manufacturing and processing led the pack with investment capital of over $14 billion, accounting for 53% of total registered capital. Electricity production and distribution came second with $5.7 billion, or 21.6%, followed by real estate with $2.41 billion.

From the total of 94 countries and territories having projects in Vietnam in the January-November period, Singapore took the lead with $7.6 billion, or 28.7% of the total newly registered FDI projects and down 5.9%, followed by South Korea with $4.36 billion, or 16.5% and up 17.6%, and Japan with US$3.7 billion, or 14%, up 54%.