Japanese investors making intentions known in Vietnam

Vietnamese Prime Minister Pham Minh Chinh will pay an official visit to Japan during November 22-25, with one of the key drivers of the visit expected to be both nations continuing beefing up trade and investment ties, as well as bilateral cooperation in many other sectors.

The Vietnamese leader will meet with counterpart Kishida Fumio and other top leaders from Japan. Both sides are expected to sign new cooperation agreements in the sectors of education, telecommunications, human resources (HR), infrastructure, and also the environment.

These agreements will help Japan expand its technology and experience in Vietnam, where a large number of Japanese investors are performing well in a wide range of sectors.

Besides an investment promotion conference, the visit will likely see PM Chinh have a working breakfast with leaders of about 20 leading Japanese groups which want to expand their investment in Vietnam, such as AEON, Mitsubishi, and Sumitomo.

At a recent meeting with PM Chinh in Hanoi, Japanese Ambassador to Vietnam Yamada Takio said that the Japanese government is committed to providing comprehensive support for Vietnam.

Referring to a recent survey by the Japan Bank for International Cooperation, which concluded that Vietnam will be the most attractive investment destination for foreign businesses in the post-pandemic period, Ambassador Takio said he is impressed with the attention of local authorities in addressing concerns of foreign investors, including those from Japan.

Japanese investors making intentions known in Vietnam-illustration photo

Infrastructure development

PM Chinh also called on Japanese investors to continue investing in Vietnam, especially in infrastructure development and sectors where Japan has strength and Vietnam has potential.

“Infrastructure development will continue to be a sector of cooperation in the bilateral ties between Vietnam and Japan in the coming time,” said a senior official from Vietnam’s Ministry of Foreign Affairs.

For example, the six ramps of the Mai Dich-South Thang Long viaduct section in Hanoi are expected to be opened for traffic in December, making the section perfect for travelling and helping end chronic traffic jams in the area.

The viaduct of Hanoi’s Ring Road 3 was funded by the Japan International Cooperation Agency’s (JICA) official development assistance (ODA) loan, was officially opened in October 2020. The project aims to construct a high-standard inner-city expressway in the western section, connecting the Mai Dich intersection and the South Thang Long intersection of Ring Road 3, which runs along the outskirts of the capital city. The 5.3-km section has 4.8km of viaduct. JICA and the Vietnamese government inked a loan deal valued at $195.48 million in 2013 to deploy the project.

“Vietnam is boosting economic activities while fighting against COVID-19, with a balance between infrastructure development and HR development playing a crucial role in economic recovery,” Shimizu Akira, chief representative of the JICA Vietnam Office, told VIR. “However, Vietnam still faces bottlenecks in view of basic infrastructure. JICA will continue to support Vietnam’s socioeconomic development by implementing transportation infrastructure projects, under the policy of the Japanese government.”

At the World Economic Forum’s Country Strategic Dialogue on Vietnam 2021 held online on October 29, PM Chinh stated that in infrastructure alone, Vietnam has a great demand for investment between now and 2030, totaling up to $30 billion per annum.

The Asian Development Bank also estimated that Vietnam would annually need at least $16.7 billion on average for the 2015-2025 period to finance its infrastructure development needs. The World Bank meanwhile forecast up to $25 billion a year. Japan’s total financial support for Vietnam in infrastructure development, especially transport, is estimated to be over $10 billion so far.

Besides supporting Vietnam in carrying out projects such as new terminals for the Noi Bai and Tan Son Nhat international airports, as well as Lach Huyen seaport, JICA has also been implementing projects to connect roads and bridges among localities, such as bridges on the North-South railway and Ke Nam bridge in the central province of Nghe An.

Recently, the Ho Chi Minh City Urban Railway Construction Project, backed by Japanese ODA worth $1.58 billion, has resumed construction after pandemic-induced delays. This metro line 1 is 19.7km long and costs $1.9 billion, and will use carriages manufactured by Japan’s Hitachi Company. It will have 14 stations beginning from Long Binh depot and ending in Ben Thanh.

“About 70 per cent of Vietnam’s national roads are built and upgraded through ODA from Japan. Completed projects have helped boost connectivity within ASEAN and facilitate the flow of goods supply chains and public travel. This has also helped localities attract more foreign direct investment,” said a JICA report released last month.

Currently, the Vietnamese government is boosting the construction of many major infrastructure projects such as the North-South expressway, Long Thanh International Airport, many highways nationwide, and facilities in the power, water, traffic, and urban development sectors.

PM Chinh stated that Vietnam is actively implementing large-scale investment programmes, particularly in critical infrastructure.

“We are actively promoting projects pertaining to inter-regional transportation infrastructure, green energy and infrastructure, and national digital infrastructure with rippling impacts. Such endeavours will provide fresh economic impetus,” PM Chinh said

He continued, “Apart from the pioneering role of public investment, we urge new business and investment models, including public-private partnerships, that encourage foreign and private investment in infrastructure.”

Improving HR quality

According to JICA, COVID-19 is posing great challenges to HR development in Vietnam. Many experts believed that COVID-19 has revealed and even increased the gap in skills required to implement the flexible business strategies of enterprises. Therefore, improving the quality of HR is an urgent issue requiring efforts and cooperation from governments, enterprises, and individuals.

“With this view, we will strengthen our efforts to develop HR at the government, institutional, and individual levels alike,” JICA’s Akira said.

Akira’s agency has cooperated with Vietnam to conduct various forms of HR training. By 2020, the number of Vietnamese students attending training courses organised by JICA was nearly 27,000 people.

Through the Project for Human Resource Development Scholarship (JDS), JICA has also made long-lasting efforts to create a nurturing and enabling environment for the private sector in Vietnam by equipping young Vietnamese policymakers with an open mind and up-to-date knowledge, to support those who will be formulating the country’s future development plans.

Since 2001, the JDS has provided full scholarships to over 700 young Vietnamese officials for postgraduate education in Japan in key areas such as strengthening the market economy; improving economic infrastructure and enhancing transport; energy, agriculture, and the environment; and strengthening the legal system and administrative management capacity.

Especially, from 2022, the new phase of the JDS will start with a new component on facilitating human resource development for industrial development.

According to JICA, in the fiscal year from April 2020 to March 2021, the total ODA commitment for Vietnam was $436.56 million; the technical grant figure stood at $38 million; and grants sat at $18.6 million. The period saw about 100 projects funded by Japan.

Figures from the Vietnamese Ministry of Planning and Investment showed that as of October 20, 2020, Japan had just over 4,600 valid investment projects in Vietnam, registered at $59.9 billion. However, one year later, the number of projects rose to 4,765 registered at $63.94 billion.

Currently, many Japanese brands have appeared in Vietnam, such as Cannon, Panasonic, All Nippon Airways, AEON, UFJ, MUFG, Mitsui & Co, and Mitsubishi.

Vietnam-Japan bilateral trade turnover in the first 10 months of 2021 hit $34.13 billion, with Vietnam earning $16.09 billion, up 2.2 per cent on-year, and spending $18.04 billion on imports from Japan, up 9 per cent on-year, according to the Vietnamese Ministry of Industry and Trade.