Most of them explained the reason behind their expansion plans is to increase sales revenues. In particular, non-manufacturing enterprises are attracted by Vietnam’s steady growth and potential market.

The country also has an abundant supply of labour and socio-political stability.

However, the JETRO report points out high risks the Vietnamese investment climate incurs, most concerning legislation, administrative procedures, taxation policy, customs procedures, and labour costs.

On the other hand, the localisation rate in Made-in-Vietnam products is rather low, at 32.2% compared to 64% in China, 53% in Thailand, 42% in Malaysia, and 41% in Indonesia.

Hirotaka Yasuzumi, HCM City-based JETRO Office managing director, said that Vietnam needs to accelerate policy and institutional reforms which concern Japanese businesses most.

He suggested the government assist local and foreign businesses in support industries to improve the competitive capacity, through appropriate interest rate and human resource development policies.

Hirotaka Yasuzumi acknowledged Vietnam’s efforts in holding dialogues with businesses and timely addressing their concerns, considering this an effective solution for investment attraction.

The survey examined 1,000 Japanese companies operating in 20 countries and territories in Asia and Oceania.

Through the survey, JETRO wants to gain a better understanding of Japanese operations in Asia and Oceania, so that it comes up with recommendations to facilitate their operations.