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Tuesday,  Apr 24,2018,04:04 (GMT+7)

Two-thirds of Japanese firms mull expansion in Vietnam

Le Hoang
Wednesday,  Feb 7,2018,22:36 (GMT+7)
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Two-thirds of Japanese firms mull expansion in Vietnam

Le Hoang

Takimoto Koji, head of JETRO’s representative office in HCMC, presents the survey at a press conference in HCMC on February 6  - PHOTO: HUNG LE

HCMC – Two-thirds of operational Japanese firms in Vietnam have plans to expand operations, according to a survey by the Japan External Trade Organization (JETRO).

JETRO on February 6 announced its 2017 Survey on Business Conditions of Japanese Companies in Asia and Oceania, which shows that Vietnam continues to be an important investment destination for Japanese businesses.

Up to 69.5% of Japanese firms have mulled expansion plans in Vietnam given their growing revenues as well as the country’s expanding market size, social and political stability, and low labor cost. This is the highest rate among 20 surveyed countries.

This is the third consecutive year Vietnam has become the country where Japanese firms want to expand their operations the most. The rate was 63.9% in 2015 and 66.6% in 2016.

According to Takimoto Koji, head of JETRO’s representative office in HCMC, 65.1% of Japanese firms in Vietnam were profitable last year, up 2.3 percentage points compared to 2016.

However, Koji said Japanese enterprises were still unsatisfied with Vietnam’s incomplete legal system, and complicated taxation and administrative procedures. They also fretted over the increasing labor costs and low local content ratios, at 30%. Therefore, he suggested the Government have more incentives for supporting industries.

Notably, Japan was the largest investor in Vietnam last year, accounting for more than one-third of total foreign investment into the country. There were 367 Japanese-invested projects approved in 2017, with total registered capital increasing by seven times compared to 2016 to nearly US$7.75 billion.

Besides, nearly 200 operational Japanese-invested projects were injected a total of US$895 million. 

However, Takimoto Koji said the surge of Japanese investment mainly came from Van Phong 1 thermal power project costing US$2.58 billion in Khanh Hoa Province, Nghi Son 2 thermal power project worth US$2.79 billion in Thanh Hoa Province and Block B-O Mon gas project worth US$1.28 billion in Kien Giang Province.

The manufacturing industry still took the lead in attracting Japanese investment, accounting for 40% of the total. It was followed by real estate with 23%, retail, hospitality, food and beverage service, logistics and transport, and construction.

The survey was conducted on 12,000 Japanese enterprises in 20 countries and territories from October 10 to November 10, 2017. There were 1,345 Japanese businesses in Vietnam taking part in the survey, with 652 of them giving the valid answers.

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