Investment Waves from Japan Continue to Rise

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It has been observed that Vietnam continues to receive foreign investment switched from from China, Thailand into Vietnam to acquire shares or set up business in Vietnam in real estate, manufacturing, and other services, especially from Japan investors.

On July 31st, 2015 Forval Group has partnered with Tin Nghia Corporation and Dong Nai Container Port JSC to announce the establishment of Japanese Small and Medium Enterprises Development JSC (JSC) with an investment capital of 772 billion VND.

Accordingly, the JSC will build the infrastructure of workshops dedicated to the small and medium Japanese enterprises in Nhon Trach 3 Industrial Zone on 18,2ha area.

The community of Japanese SMEs tends to invest abroad but there is no need to rent vacant land but to rent factory space to shorten the time of initial investment. Therefore, the construction of the factory infrastructure to attract Japanese SMEs is efficient model.

Earlier, on July 26th, 2015, Creed Group Investment Funds (under the Creed Group – Japan) signed a 200 million USD investment project in An Gia Investment and Property Development JSC. Besides, Creed Group also provides loans for An Gia to buy project, building high quality Japan housing projects in HCMC. In addition to financial investment, Creed Group has also transfer the real estate development technology for An Gia. But this is only the first step in the strategic partnership between the two sides. Creed Group will continue to increase investment if real estate market developed well.

Another Japanese corporation that is Kyocera Mita in May has also invested in building a factory in Hai Phong with capital of 200 million USD. The project was built in Vietnam – Singapore Urban, Industrial and Services Area (VSIP Haiphong) with an area of 20ha, specializes in manufacturing all types of printers, copiers for export to 140 countries around the world.

According to data from the Foreign Investment Department (Ministry of Planning and Investment), by the end of Quarter II/2015, Vietnam has attracted 2,551 projects with a total investment capital of up to 37.7 billion USD. Particularly in HCMC, there are 787 Japanese companies are operating in many sectors from retail, real estate, manufacturing, science and technology…

Early of June 2015, the delegation led by Mr. Iwasaki Yasuo, Vice Governor of Saitama City is visiting HCMC to exchange the cooperation opportunities. Continued with the investment trend, during the connection day between Japan and Vietnam companies in the field of agricultural, food, held in HCMC on July 31st 2015, 25 Japanese companies have also met with 100 Vietnam companies to explore business opportunities. Since last year there have been over 6,000 Japanese businessmen came to find out information about Vietnam market with the desire to invest and expand their business here.

In particular, 60% of enterprises are interested in service fields such as restaurants, hotels, wholesalers, retailers, the remaining opportunities are in the field of manufacturing and processing.

With the advantages of labor and investment environment have increasingly been improved, some Japanese companies that are investing in Thailand and China have decided to choose Vietnam as next destination. Jetro’s survey showed that as many as 25% of enterprises operating in China said they would move to Vietnam in the coming years.

Because of labor costs are increasing but limited workforce, many Japanese companies have tended to move abroad and Vietnam is the preferred destination. The wave of investment into Vietnam will continue to increase in the future, including commissioned production form.

The wave of companies shifting from China to 3rd country has occurred for some years, however, at the present, this trend is growing fast. The reason is that labor costs in China rising, and many other obstacles. While Vietnam has favorable conditions for investment and development through young labor force and low labor costs. With over 90 million people, Vietnam is the 3rd largest market of South East Asian region and this market is continuing to open when the ASEAN Economic Community was established by the end of this year. In addition, the investment environment in Vietnam is increasingly improved and the performance of businesses has developed.

The survey conducted by JETRO in 2014 showed that there are 66% of Japanese companies in Vietnam want to expand operations in the next few years because of good business performance. Up to 84.4% of Japanese companies participating in the survey said that they have higher revenue in 2014 than in 2013, with production sector, up to 70% enterprises see high potential in Vietnam market. Besides the favorable conditions to attract investment, the support from the Bank of Japan also help Japanese companies expand business strongly. One of the “synergy” of Japan investors is Tokyo Mitsubishi UFJ, the country’s largest bank with market capitalization of up to 170 billion USD.

Mr. Nobuyuki Hirano, President of Tokyo Mitsubishi UFJ Bank in the meeting with Prime Minister Nguyen Tan Dung in April 2015 said they would continue to support capital for the Japanese businesses to invest in Vietnam, as well as support Vietnam in the development of supporting industry, high technology industry, infrastructure and agricultural development.

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