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Japanese firms hesitant to tap Vietnamese market over fears of worker dearth

By Le Hoang

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HCMC – Many Japanese manufacturers, mainly those active in technology, are hesitant to invest in Vietnam due to difficulties recruiting skilled workers and finding material supply.

Nobuyuki Matsumoto, chief representative of the office of the Japan Trade Promotion Organization (JETRO) in HCMC, told this to The Saigon Times on the sidelines of the opening ceremony of the METALEX Vietnam Exhibition and the Supporting Industry Exhibition 2022 on October 6.

Many Japanese enterprises, especially those in China, are keen on investments in Vietnam for their shift and expansion plans, but the shortage of highly-skilled workers and material supplies facing the country has deterred them, Nobuyuki said.

Vietnam is still an attractive destination for labor-intensive manufacturing firms, the JETRO representative said, adding that as HCMC no longer sees low labor costs, Japanese firms have been moving their investments to the city’s neighboring provinces.

“Low labor cost is still a key factor deciding Japanese firms’ investments, but Japanese investors are also taking the potential of a skilled workforce into account,” said Nobuyuki.

“HCMC is a major training hub and is available for a highly skilled workforce, but appears not to have enough workers to meet the demands of international investors, including Japanese firms,” he added.

A recent survey by JETRO showed that over 55% of participating Japanese firms intend to expand in Vietnam in the next one or two years.

Vu Trong Tai, general director of RX Tradex Vietnam Company, the organizer of the exhibition, said that Vietnam is emerging as a leading market with low supply and production costs. The country has also seen the machinery and supporting industries grow strongly over the past few years.

However, the JETRO representative said that Vietnamese firms were expected to face multiple challenges. When international investors tap the local market, Vietnamese manufacturers will have to update machines and technologies, ramp up productivity, reduce consumables and improve human resources.

The METALEX Vietnam Exhibition and the Supporting Industry Exhibition 2022, held at the Saigon Exhibition and Convention Center in HCMC, are set to wrap up on October 8.

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