What is the standing of Japanese funding into Vietnam these days, and what are the risks that companies should take notice of?
|Motokatsu Ban, manager and head of Japanese Corporate Department No.2 at Mizuho Bank Vietnam in Hanoi |
As of June 20 there were 4,716 Japanese investment projects in Vietnam, with the registered capital of just over $63 billion, according to the Foreign Investment Agency under Vietnam’s Ministry of Planning and Investment. Japan is a long-standing strategic companion of Vietnam and over time, the two countries are well-positioned to enhance economic ties.
The urgent need for Japanese companies to increase their footprint in Vietnam has been the main driving force to attract strong interest, partly because Vietnam has maintained positive growth in GDP despite the COVID-19 pandemic.
However, the manufacturing industry, which accounted for the majority of companies expanding into Vietnam, has not expanded as much as before.
There are reports that production bases will be transferred or expanded from China and other countries in order to rebuild the supply chain due to US-China economic friction and the influence of COVID-19. But I do not think there are many such companies. Japanese companies have always assumed various risks and build their supply chain around those risks.
Although there are exceptions, such as in the semiconductor industry, most companies seem to be anticipating this risk. We have not heard of COVID-19 making supply chain changes. Companies entering the market will focus on increasing sales and expanding product lineups. In the service industry, new business is proceeding smoothly and is expected to accelerate in the future. The need for Japanese companies to tap into growing domestic demand in Vietnam is clear. In addition, the demand for mergers and acquisitions (M&A) continues to be strong.
I personally feel that Japanese companies have a strong interest mostly in construction, real estate, food and beverages, and electricity. We want to get involved, be a critical part of the game, and explore more sensible business opportunities in Vietnam, of which we believe our Japanese know-how will reap fruits.
We firmly believe that the favourable domestic business environment, with institutional reform and great effort from the local government, has facilitated international trade and boosted foreigners’ confidence when investing in Vietnam.
How does Mizuho support Japanese corporations in setting up, operating, and expanding in Vietnam?
As one of the three largest megabanks rooted in Japan, our top priority is to support both foreign companies and Japanese corporations in these activities in this country.
Our strategic approach could be a bit different from Vietnamese commercial lenders, which specialise in the retail banking business. However, our actions have been driven by the motto of contributing to Vietnam’s prosperity and enhancing bilateral ties between the two countries.
Mizuho mainly handles remittances, receiving funds, and foreign exchange. In Vietnam, financial regulations are often more complex than in Japan, thus required lengthy processes and strict procedures. Thus, explaining and updating regulations to customers is one of the most important tasks for us.
We also conduct market research and provide information to customers who are considering new business opportunities. We have over 10 analysts for the Vietnamese market, who are absolutely rich in experience.
We would like to focus on business opportunities through M&As, which have generated a lot of buzz. Furthermore, Mizuho also closely monitors the latest development in the equitisation and divestment of Vietnamese state-owned enterprises and consider how to deal with them.
What will be the new trends shaping the financial market in Vietnam and the wider region, and how is Mizuho adapting to these trends?
Yes, we are watching recent trends – particularly in fintech and digital banking in Vietnam. We think it is important to capture these trends, and respond to and meet such customer needs through Vietcombank, which we invested in.
Vietnam is a critical part of our global expansion and one of the most prominent marketplaces for Japanese banks in general. Mizuho is currently the largest strategic shareholder of Vietcombank, holding 15 per cent stake.
Mizuho Bank, Ltd. does not operate retail banking in Vietnam. However, we are developing and deploying a variety of technology-driven products throughout Asia in our Corporate Banking Division.