Bilateral prospects are strong

What impact will the visit of Prime Minister Nguyen Xuan Phuc have on the promotion of investments in Vietnam?

A large-scale investment promotion conference is planned to be held in Tokyo on the occasion of Prime Minister Phuc’s visit to Japan. Some concrete achievements in foreign direct investment (FDI) projects will be announced on this occasion. We believe that FDI from Japan to Vietnam will continue to increase, primarily focused on the manufacturing and energy sectors. Also, there is a possibility that collaboration between Japanese small- and medium-sized enterprises (SMEs) and Vietnamese companies will be accelerated, promoting the supporting industry in Vietnam, to which the Vietnamese government attaches strong importance. Still, to strengthen the links between Japanese and Vietnamese companies, it is strongly suggested that Vietnam continue to improve its business climate and implement further reforms. Therefore, on this special occasion in Tokyo, it is very important that Prime Minister Nguyen Xuan Phuc makes a commitment to this endeavour.

What are the current trends for Japanese investments in Vietnam?

Over the past three years, FDI from Japan has continued to increase in terms of the number of projects, however the overall amount of capital invested remains almost the same. FDI from Japan has been diversifying. Most Japanese companies entering Vietnam still focus on export-oriented manufacturing, benefitting from Vietnam’s abundant, cheap, and high-quality labour force. But others have set their sights on expanding within Vietnam, particularly in the rapidly growing retail sector.

In addition, some Japanese companies that have been operating in Vietnam for quite a long time have launched products such as instant noodles (Hao Hao) or rice crackers (ICHI) that were developed by research and development (R&D) teams led by Vietnamese staff, reflecting Vietnamese tastes while using Japanese production techniques.

The two countries are also fostering agricultural projects in Vietnam. What is the outlook for this type of Japanese investment in Vietnam?

In the agricultural sector, based on the framework of the Japan-Vietnam Agriculture Cooperation Dialogue, both governments are currently promoting a connection between economic co-operation and private investment in order to establish an organised value chain for food in Vietnam.

Some Japanese agricultural groups and firms have started farming in Da Lat – in Lam Dong province – and the Moc Chau area of Son La province where the weather is cool. Hence, Japanese agricultural technologies can be easily applied to the geography and meteorology of Vietnam.

Based on this, more and more Japanese firms are interested in the agriculture sector in Vietnam. Therefore, we would like to continue to work closely with the Vietnamese side in this field.

What are the achievements and challenges in the Japan-Vietnam Joint Initiative to improve the business environment in Vietnam?

The Japan-Vietnam Joint Initiative to improve the business environment in Vietnam that was launched in 2003 is now in its sixth phase. The initiative has achieved various successes.

Currently, we are having a series of discussions with relevant ministries in seven areas, including labour, wages, legal institutions in such areas as investment and corporate law, pharmaceutical imports, and more. In order to further improve the investment climate in Vietnam, we believe that two major and fundamental issues have to be urgently dealt with.

First, it is necessary to improve the government’s structure to implement policy objectives. It is advisable that the Vietnamese government establish a government structure that enables the steady implementation of their policy objectives.

The second issue is related to business costs, particularly so-called “informal fees” that occur in the process of administrative procedures. Such informal fees have negatively impacted the business climate and transparency in Vietnam, and could be a factor that impedes productivity growth in the country.

Low salaries in the public sector can also be attributed to this issue. In order for Vietnam to achieve substantial economic growth in the future, it is a vital step to overcome this.

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