Corridor Proves Its Attraction
By Trung Chau
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| The new terminal of the Danang International Airport which was inaugurated last week |
Japanese investors have shown great interest in Central Vietnam, the main region of the East-West Economic Corridor. But they said that the region needs more and better infrastructure to lure long-term investors.
Danang Industrial Zones Authority recently licensed Japan-based Tokai Kogyo Co., which invested in a US$10-million plant producing auto spare parts and components. When commissioned, the factory on five hectares in Hoa Cam Industrial Park will supply large auto manufacturers such as Honda, Toyota, Nissan and General Motors.
With this project in the pipeline, Vietnam becomes the sixth country, Tokai Kogyo has committed investment after the United States, China, Thailand, Indonesia and India.
Not long ago, Danang City government also joined forces with Japan’s Kajima Corporation to make a feasibility study on designing, constructing and operating a wastewater treatment plant for Danang-based industrial parks. The project, funded by Japan’s Ministry of Natural Resources and Environment, will get off the ground in the middle of next year after the feasibility study is completed in March.
Eyeing Central Vietnam
Tokai Kogyo and Kajima are just two among the host of Japanese investors showing interest in Danang City at the end of East-West Economic Corridor (EWEC).
Representatives of Vietnam’s Ministry of Planning and Investment made known figures about Japanese investment projects in this region in the 5th Vietnam-Kansai economic dialogue forum held in late November. According to the sources, 750 foreign-invested projects with the total registered capital of US$23.7 billion were committed by October. Japanese investors accounted for only 71 projects worth US$417 million.
According to Deputy Prime Minister Hoang Trung Hai, as part of the EWEC, Vietnam’s central region offers a plethora of investment opportunities. However, this region has yet to make full use of the potential to attract foreign investors, especially Japan. Therefore, the figures given above show only part of the entire picture.
Hai also mentioned several large infrastructure facilities in the region such as international seaports and airports, economic zones, provincial road networks and future expressways.
In the forum, over 156 Japanese investors regarded this region as a potential destination for their investments in manufacturing industries relying on hi-tech, energy and environment.
Shosuke Mori, chairman of Japan’s Kansai Economic Federation (Kankeiren), said many notable manufacturers in Kansai region, the second largest economic region in Japan—such as Panasonic, Sharp, Sanyo, Hitachi Zosen, Sumitomo Metal and Takashimaya—have indicated their interest in Vietnam’s central region, eyeing it as a possible destination for their expansion demand. Furthermore, there is a strong likelihood that some Kansai investors will shift their investments to Vietnam from China in the future.
Yutaka Sawada, general director of the interior design firm Sawada Mokkousyo, said this was the first time he had come to Vietnam to seek investment opportunities. He said the EWEC might be a potential destination not only for his firm but also for small and medium enterprises in Kansai.
Over half of around 1,600 Japanese-invested projects in Vietnam are working in the supporting industries and are mainly based in the northern and southern regions of Vietnam, said Sakae Yoshida, chief representative of the Japan External Trade Organization (JETRO) in HCMC.
For better investments
“If it wishes to attract more Japanese investors, the central region should pay more attention to the supply chain of components and technical workers,” said Yoshida.
Other Japanese investors suggested Central Vietnam should develop some key infrastructure projects, including seaports, port logistic services, the Danang-Dong Ha Expressway and tunnels across Phu Gia and Phuoc Tuong Passes. Besides, it is necessary to invest in hi-tech and supporting industries and simplify administrative procedures at border gates.
Regarding human resources, the Japanese side has cooperated with schools in HCMC and Danang City to provide engineering, architecture, computing and language courses. In line with these schemes, workers are sent to Japan for further training in five years’ time and then return to Vietnam to work in Japanese firms.
Kailchi Hasegawa, president of Ehle Institute, said the Kansai region has 120 colleges and vocational schools, which will facilitate the cooperation among HCMC, Danang and Japanese schools in training the necessary work force.
With the EWEC route as a gateway to the Lower Mekong region, Central Vietnam has plenty of development potential at its disposal. Vietnam has tried to attract foreign investment to turn the region into a production center that can join the global supply chain and create added value for Vietnamese products. Japanese investors in general and Kansai investors in particular do not want to miss such opportunities.