Japanese firms set sights on Ips

With 42 per cent of Japanese firms reportedly relocating from China,
Vietnam could gain a large boost in investment

Minister of Planning and Investment Bui Quang Vinh met with leaders of Japan’s Saitama prefecture last week. The guests said many Japanese investors, and both small and big enterprises, wanted to do business in Vietnam.

The Japanese side suggested that they would co-ordinate with local authorities in the southern province of Dong Nai to build an industrial park (IP) for the supporting industries to attract Japanese small and medium-sized enterprises (SMEs). Dong Nai and Saitama finally agreed that the former would build its existing 180 hectare Nhon Trach 2 IP under the latter’s requirements. After this, Dong Nai would lease the park to Saitama, which will attract Japanese SMEs.

“We are appraising this investment model. If it is deemed effective, it can be multiplied nationwide,” Vinh said at last week’s third joint meeting between Vietnam’s Ministry of Planning and Investment and the Japan Chamber of Commerce and Industry (JCCI).

The meeting was attended by many Japanese big firms, including Itagaki Iron Works, Japan Air, Sojitz, Itochu, Tokyo Seiden, Set Software, Toyota, ANA Holdings, and Mitsubishi. These firms told the MPI they wanted to both expand business and open more factories in Vietnam, and that Vietnam should build specialised IPs for Japanese firms, with a special focus on IPs for Japanese SMEs.

“SMEs will become a key driver of Vietnam’s economy. Japanese SMEs also want to be part of the economy,” said Yoichi Kobayashi, chairman of the Mekong-Japan Business Co-operation Committee. He introduced Japan’s “Maru” lending system to the MPI, currently conducted by the JCCI in favour of Japanese SMEs. These SMEs are given loans from this system without having to make asset deposits or be guaranteed. The loan’s maximum value is 20 million yen ($166,000), with the maximum lending rate of 1 per cent per year, within 7-10 years.

“We hope the Vietnamese government can study this system to develop it in Vietnam,” he said. “We also want to co-operate with the Vietnamese government to build its policy to support SMEs.”

Kobayashi said that as of this year’s end, when the ASEAN Economic Community was established, Japanese firms would greatly benefit from cementing investment ties with Vietnam, where they could boost exports to regional markets.

The Japan External Trade Organisation will support a large group of Japanese firms to enter Vietnam to seek investment opportunities this November. It is reported that 42 per cent of Japanese firms in China wish to relocate their production to other nations. This means that Vietnam will have many opportunities to lure more Japanese investment.

Arakawa Yoshio, managing director of Universal Computer System, said that his firm wanted to establish a company in Vietnam to provide IT solutions. So far, it has found several local partners. “Still, Vietnamese partners cannot provide us with value added tax invoices for products purchased from some online channels. Also, Vietnam still doesn’t allow the opening of credit cards with names of enterprises.”