Ja­panese busi­nesses to ex­pand op­er­a­tions in Viet­nam

Business Mirror - - ASEAN -

OVER 60 per­cent of Ja­panese busi­nesses op­er­at­ing in Viet­nam plan to ex­pand their op­er­a­tions, re­gard­ing the South­east Asian na­tion as a cru­cial in­vest­ment desti­na­tion, ac­cord­ing to a Ja­pan Ex­ter­nal Trade Or­ga­ni­za­tion (Jetro) sur­vey.

The find­ing, re­vealed at a sem­i­nar in Hanoi, was part of Jetro’s 2015 sur­vey on the busi­ness op­er­a­tions of Ja­panese-af­fil­i­ated firms in 20 coun­tries and re­gions in Asia and Ocea­nia. The sur­vey, con­ducted be­tween Oc­to­ber and Novem­ber 2015, re­ceived valid re­sponses from 4,635 Ja­panese com­pa­nies, in­clud­ing 557 op­er­at­ing in Viet­nam.

Speak­ing at the sem­i­nar, At­susuke Kawada, Jetro chief rep­re­sen­ta­tive in Viet­nam, said the per­cent­age of re­spon­dents in Viet­nam plan­ning to ex­pand op­er­a­tions was rather high com­pared with other coun­tries in the re­gion such as In­done­sia, Thai­land, the Philip­pines, China and Malaysia, with per­cent­ages of 52, 49, 55, 38 and 45, re­spec­tively.

The sur­vey said the main rea­son for busi­ness ex­pan­sion was a rise in rev­enue with 85 per­cent of re­spon­dents choos­ing it as the most en­cour­ag­ing fac­tor.

In 2015 nearly 60 per­cent of Ja­panese com­pa­nies op­er­at­ing in Viet­nam gained prof­its, down 3 per­cent­age points yearon-year. How­ever, in an ab­so­lute value, the num­ber of firms re­port­ing prof­its in­creased from 281 to 326.

Viet­nam cur­rently ranks third out of 15 coun­tries in ease of re­cruit­ment, with re­spon­dents prais­ing “mar­ket scale and growth abil­ity” and the “sta­ble so­cialpo­lit­i­cal sit­u­a­tion” of the coun­try, the sur­vey said. It added Viet­nam’s la­bor costs were rel­a­tively low in com­par­i­son to other coun­tries. For ex­am­ple, la­bor costs in the man­u­fac­tur­ing in­dus­try are less than a half of those costs in China, Thai­land and Malaysia.

How­ever, roughly 80 per­cent of Ja­panese firms in Viet­nam cited an “in­crease in em­ployee wages,” the sur­vey said.

In term of risks stem­ming from the in­vest­ment en­vi­ron­ment, 60 per­cent of the sur­vey re­spon­dents said that ad­min­is­tra­tive for­mal­i­ties, cus­toms for­mal­i­ties, the tax sys­tem, laws and in­creas­ing wages in Viet­nam posed the great­est risk to in­vestors in the coun­try, the sur­vey said.

Viet­nam’s lo­cal­iza­tion rate, or the per­cent of sup­plies that can be sourced lo­cally, has reached 32 per­cent, down 1 per­cent year-on-year. This rate is higher than the Philip­pines (26 per­cent) but much lower than China, Thai­land, In­done­sia and Malaysia, which have 65 per­cent, 56 per­cent, 41 per­cent and 36 per­cent, re­spec­tively, the sur­vey said.

Kawada said in or­der to in­crease com­pet­i­tive­ness in costs, Viet­nam should de­velop ca­pac­ity for lo­cal parts sup­pli­ers help­ing Ja­panese firms in­crease the amount of lo­cally pro­duced parts.

Ac­cord­ing to the Min­istry of Plan­ning and In­vest­ment, as of June 2015, Ja­pan is the se­cond-largest in­vestor in Viet­nam, af­ter South Korea, with nearly 2,700 in-ef­fect in­vest­ment projects with cap­i­tal of $37.7 bil­lion.

The an­nual sur­vey has been con­ducted since 1987 by Jetro to un­der­stand the busi­ness ac­tiv­i­ties of Ja­pan-af­fil­i­ated com­pa­nies in Asia and Ocea­nia, in­clud­ing Viet­nam.

The sur­veyed firms op­er­ate in a wide range of sec­tors, in­clud­ing au­to­mo­biles, ma­chin­ery, chem­i­cals and phar­ma­ceu­ti­cal prod­ucts, food, tex­tiles, retail, trans­port, in­for­ma­tion and com­mu­ni­ca­tions tech­nol­ogy and fi­nance.

Ja­panese firms to in­vest more

JA­PANESE en­ter­prises wish to ex­pand their in­vest­ment co­op­er­a­tion with Viet­nam as the coun­try con­tin­ues to en­joy strong growth, es­pe­cially af­ter the re­cent sign­ing of a num­ber of trade deals.

This state­ment was made by Kishi­moto Yoshio, di­rec­tor gen­eral of Ja­pan’s Kyushu re­gion’s Bureau of Econ­omy, Trade and In­dus­try, who led a del­e­ga­tion of 30 Ja­panese busi­nesses to visit Hiep Phuoc In­dus­trial Park in HCM City on Mon­day.

At the re­cep­tion for the del­e­ga­tion, head of the HCM City Ex­port Pro­cess­ing and In­dus­trial Zones Au­thor­ity, Vu Van Hoa, said 17 in­dus­trial parks in the city have so far at­tracted about 1,300 projects with to­tal in­vest­ment cap­i­tal of $9 bil­lion.

Of the fig­ure, 559 projects worth $5.4 bil­lion are for­eign in­vest­ments.

Ja­pan is the largest in­vestor in the city’s in­dus­trial parks with 119 projects cap­i­tal­ized at $1.3 bil­lion.

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