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Vietnam stands above China as favorite business destination for Japanese firms
Ngoc Mai 08:40, 2019/03/05
The reason behind such positive sentiment was the high percentage of Japanese firms in Vietnam reporting a profit, reaching 65.3%, up 0.2 percentage point year-on-year.
Nearly 70% of Japanese firms operating in Vietnam want to expand business, the highest rate among ASEAN countries and significantly higher than that in China at 48.7%, according to Hironobu Kitagawa, chief representative of the Japan External Trade Organization (JETRO) in Hanoi. 
 
Illustrative photo.
Illustrative photo.
The reason behind such high rate was the high percentage of Japanese firms operating in Vietnam reporting a profit, reaching 65.3%, up 0.2 percentage point year-on-year, Kitagawa said at a press meeting on March 4 showing the JETRO’s 2018 survey on international operations of Japanese firms.

Other factors such as stabilized macro-economy, the scale of the domestic market, and potential economic growth also added to the positive sentiment, Kitagawa added. 

Additionally, more than 780 Japanese enterprises took part in the survey in Vietnam, the highest of any country in Asia and Oceania, “which showed a high level of interest from Japanese firms towards Vietnam’s business environment,” Kitagawa stated.

Notably, the localization rate of Japanese production in Vietnam reached 36.3%, up 3.1 percentage points year-on-year, the highest growth rate among countries taking part in the survey. 

However, the survey also pointed to potential risks to Vietnam’s business environment, including the inefficient implementation of the legal system, which was reported by 48.2% of Japanese firms, up 1.3 percentage points year-on-year. 

Rising wages, complicated and unpredictable tax procedures, unclear policy regarding the automobile industries are also named in the survey as concerns for Japanese firms. 

Vu Dai Thang, vice minister of Planning and Investment, said the figure of 65% Japanese enterprises posting a profit in Vietnam is significant, especially when the rate of foreign enterprises sustained losses in the country is 52%. 

Thang added the positive view from Japanese firms showed improvements in Vietnam’s business environment. 

“With growing market size and Vietnam being participants in a number of free trade agreements, Japanese firms have an opportunity to access new markets and enjoy larger profit by doing business in Vietnam,” Thang said. 

Thang stated that the survey would give the Ministry of Planning and Investment more valuable insights during the process of drafting new strategy for FDI attraction, as well as revised corporate and investment laws, which could be submitted to the National Assembly for approval by the end of 2019. 
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