Vietnam is not only an attractive investment market in the eyes of Japanese investors, it is increasingly becoming an interest in investment funds from countries in the Persian Gulf Area. In a survey by the Japan Trade Promotion Organization (JETRO), Vietnam ranked 2nd among “countries and territories where businesses want to expand their investments” for setting up company just behind the US.
In particular, the strong investment field in Vietnam is still the production of components, spare parts and high technology. In the eyes of Japanese investors, Vietnam is still an attractive investment market and maintains good growth, despite the decline in investment in other markets.
Two products including “passenger door” and “cargo door” for Boeing aircraft are manufactured in Vietnam by MHI Aerospace Vietnam Co., Ltd – a Japanese enterprise. Setting up business and investing in Vietnam since 2007, up to now, this business has supplied a large number of door components for Boeing aircraft.
Vietnam meets most of its production requirements. For example, the door part of a Boeing 777 has up to 6,300 parts, and just one wrong detail can greatly affect safety. For production of aircraft door in Vietnam by Vietnamese employee, the company can fully guarantee product quality, delivery time and receive high praise from customers. In the near future, the company will expand production with a focus on East South Asia, specifically Vietnam.
Currently, Japanese enterprises are focusing more on manufacturing high-tech products in Vietnam, which was previously made in Japan, China and some ASEAN countries. For example, Japan’s Terumo Vietnam Co., Ltd., specializes in the production of high-precision vascular interventional devices in Vietnam.
The company’s products are medical equipment, and the high quality factor must be the top priority. In order to ensure quality, it requires ingenuity and abundant and skilled human resources to meet the requirements for manufacturing medical equipments in Vietnam.
In addition to advantages in Vietnam such as favorable location, preferential policies for foreign enterprises, Japanese enterprises still face challenges such as instability in global energy, rising labor costs, and sometimes the administrative procedures are complicated… However, the investor believes that under the leadership of the Government, Vietnam has gradually controlled control the epidemic, create conditions and confidence for businesses to invest and set up business in Vietnam.
According to JETRO, Japan’s outward investment flows grew only 3% in 2021 and fell 49% in the first half of 2022 year-on-year. However, Japanese investment in Vietnam still has impressive growth, more than 59% in 2021 and more than 45% in 2022. The investment field does not stop at manufacturing cars and electronic components, but has been expanding into other fields such as renewable energy, healthcare, agro-forestry-fishery, even fintech.
Vietnam in the interest of Gulf investors
As for investment funds from the Gulf Area, which is also doing well, Vietnam is increasingly becoming an interest in these funds. Previously, Vietnam was not a familiar name on the investment map of this region, but now that reality is gradually changing.
In the Gulf Area, high oil prices are causing investment activities to become busy. Idle money spiked at both the institutional and individual levels, creating a need to find profitable investment destinations. No country can avoid being affected by pandemic then inflation, and fluctuations of the world economy but Vietnam has endured to help its economy not be affected. The Vietnam has been praised in doing a great job to attract investment to Vietnam, i.e. removing a number of procedural hurdles for investors to invest and establish business in Vietnam.
Amima is also an investment fund that is paying a lot of attention to Vietnam. Specializing in investing in the agricultural sector, Amima has been in a period of non-stop activity, as post-pandemic Gulf economies are becoming more and more aware of food security. It is expected that this November, the organization will send a representative to Vietnam to directly learn about investment opportunities. When investing in a country, this fund cares about the commitment, consistency and achievements of that country over time. And what they see from Vietnam are all positive signals. It motivated the fund to go to Vietnam to find opportunities.
From the perspective of economic experts, new capital flows to Vietnam are coming as a trend. It shows how positive a view is on Vietnam’s economic prospects. The World Bank report also pointed out that Vietnam’s economy is moving ahead with specific explanations, all of which are very public and clear, creating an attraction for investors.
It is too early to say how much Vietnam’s economy can benefit from capital flows from the Gulf, but it can also be seen that in the context of the world economy’s difficulties, the image of Vietnam’s economy is still being continuously improved.
Regarding FDI, from the beginning of the year to October 2022, disbursement of foreign investment capital has reached nearly 17.5 billion USD, an increase of more than 15% compared to the same period in 2021. It is also forecasted that for the whole year this year, the investment disbursement level can reach 22 billion USD, the highest increase can be up to 11.5% compared to 2021.