What is your perspective on Vietnam’s investment environment, particularly concerning FDI from Japan? What sector attracts the most Japanese investment?
Aside from its high economic growth rate, youthful population, and abundant high-quality workforce, Vietnam’s geographical proximity and cultural similarities make it an extremely appealing destination, especially for Japanese investors.
The manufacturing sector holds immense promise. For example, Vietnamese companies are already part of supply chains for Japanese manufacturers. In terms of human resources, skilled Vietnamese IT engineers cooperate with Japanese companies to drive digital transformation. Similarly, in green transformation, Japanese firms with technology and financial strength are partnering with Vietnamese companies in various projects, with the goal of achieving the dual objectives of emissions reductions and economic growth.
What difficulties do foreign investors still face in Vietnam? What suggestions would you make to improve the business and investment environment?
Apart from incomplete regulations and systems, administrative procedures such as licensing and approvals remain complex and time-consuming. Infrastructure development, particularly ensuring stable power supply - a crucial factor for manufacturing - is another challenge. The power shortages experienced in June, mainly in the northern region, serve as a significant example. Furthermore, Japanese companies often suggest the need for the further development of supporting industries and the training of highly-skilled human resources.
Despite both the short-term and long-term challenges mentioned above, we believe that addressing these issues individually will further enhance Vietnam’s investment environment.
What are your views on FDI flows into Vietnam in the second half of 2023?
Despite the global economic downturn and sluggish domestic real estate market, figures up to May show that Japan’s direct investment in Vietnam has exceeded $20 billion, ranking it second globally. According to a recent survey by the Japan External Trade Organization (JETRO), Vietnam stands as the top choice globally for the headquarters of large Japanese companies looking to expand their businesses in the future. Sixty per cent of Japanese companies with investment in Vietnam intend to expand further. Consequently, Japanese businesses continue to consider Vietnam as one of the most promising global investment destinations. It is expected that Japanese investment in various fields will continue to rise throughout the second half of 2023.
Vietnam is a strategic partner of Japan across multiple sectors. Different projects invested in by Japanese companies harmoniously align with various forms of support like official development assistance (ODA) from the Japanese Government, contributing to Vietnam’s economic development and, in turn, supporting Japan’s economic growth. I am confident that the mutually-beneficial relationship between Japan and Vietnam will continue to thrive.
What is your view of the economic cooperation between Vietnam and Japan in the years to come?
Vietnam takes pride in its high economic growth, providing a substantial pool of high-quality workers and becoming a significant economic partner of Japan. One explicit example is the presence of over 2,000 Japanese companies, the largest in Southeast Asia, in Vietnam.
Such factors underscore the significant regard that Japanese enterprises hold for Vietnam and their proactive interest in future business development. Notable cooperation includes Vietnamese companies participating in supply chains for Japanese firms. Many products manufactured or cultivated in Vietnam are sold in the retail outlets of Japanese companies. There is also cooperation in human resources, with skilled Vietnamese IT engineers actively working in Japanese enterprises, promoting digital transformation. These cooperative efforts are anticipated to further increase in the future.
In terms of green transformation, Japanese firms possess technology and financial strength and are cooperating with their Vietnamese counterparts on various projects to achieve both emissions reductions and economic growth. These proactive business initiatives contribute directly to Vietnam’s economic development by creating more jobs and more opportunities. Furthermore, the cooperation between Japanese and Vietnamese enterprises also supports the growth of human resources and business development in Vietnam. I hope that the mutually-beneficial relationship between Japan and Vietnam will continue to thrive.
Additionally, the Japanese Government intends to revitalize ODA cooperation with a focus on infrastructure. This aims to accelerate Vietnam’s economic growth and investment expansion in the post-Covid era. This approach has been affirmed by high-level leaders from both countries. Japan will also actively support Vietnam’s socio-economic development through technical cooperation, aiming to enhance human resources. In terms of training and developing human resources, we aspire to strengthen cooperation, especially in high-quality human resources training.
Not limited to the economic aspect, cultural and sporting exchanges (for e.g., football) between the two countries are expanding as well, especially during celebrations of the 50th anniversary of diplomatic relations. Various Japanese festivals will be held around Vietnam this year. Moreover, an opera entitled “Princess Anio”, based on a 400-year-old love story between Nagasaki businessman Araki Sotaro and Princess Ngoc Hoa of the Nguyen Dynasty, will premiere in September. Through these exchange events, I hope that everyone involved in the Japan-Vietnam relationship can rediscover and reaffirm the numerous similarities and closeness between the two countries. The foundation of the Japan-Vietnam relationship lies in “understanding and empathy between people.”
What do you think Vietnam and Japan could do to strengthen their relationship?
Vietnam is an important and necessary partner in Japan’s pursuit of the Free and Open Indo-Pacific (FOIP) vision. Japan believes that by partnering with Vietnam, strong cooperative mechanisms can be fostered to contribute to the peace and prosperity of the region.
The Japan-Vietnam relationship is arguably in its best phase of development to date. In the economic realm, on the occasion of the 50th anniversary of diplomatic relations, the Japanese Government is committed to intensifying investment activities in Vietnam by Japanese companies that have greatly contributed to Vietnam’s economic growth. Furthermore, to facilitate greater economic development in Vietnam, Japan hopes to reinstate its ODA program for Vietnam’s robust development, particularly by supporting infrastructure construction to enhance its investment environment. I wish to reinforce cooperation between our two countries in areas such as green transformation, digital transformation, modernization, industrialization, and human resources development in Vietnam.
In an increasingly complex security environment, I would like to emphasize that cooperation between Japan and Vietnam in security and defense is becoming more critical. The participation of certain Japanese companies in exhibiting and introducing products at the Vietnam International Defense Exhibition 2022 in Hanoi in December 2022 signifies new potential in security and defense cooperation between our nations. In 2023, I hope that concrete activities in security and defense cooperation between Japan and Vietnam will see significant progress.
Building on the achievements in specific cooperative efforts between our countries and based on the mutual understandings reached between the top leaders of both nations during online talks between Prime Minister Kishida Fumio and General Secretary of the Central Committee of the Communist Party of Vietnam Nguyen Phu Trong last February, I anticipate the Japan-Vietnam relationship being elevated to new heights. This partnership should evolve into a comprehensive strategic relationship that extends beyond bilateral to regional and global cooperation.
What obstacles need to be resolved to boost economic relations?
Vietnam has been remarkably successful in attracting investment from other nations. Notably, I commend its active engagement in economic partnerships, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), as well as its efforts to eliminate barriers upon accession.
A survey of Japanese companies reveals that Vietnam is the most attractive and favored investment destination worldwide. However, Vietnam still faces challenges.
Firstly, there’s the matter of infrastructure. Enhancing transportation and energy infrastructure will make Vietnam an even more appealing market for Japanese investors. I particularly believe that Vietnam has ample potential for developing transportation infrastructure such as highways and railways.
Secondly, there are procedural issues. Japanese investors express concerns about delays and unclear aspects in procedures and regulations. I hope that Vietnam will continue to make efforts to address these matters.