Putting a face to Japanese investors

Nguyen Thi Bich Van

What is the purpose of the recent survey?
It is an activity held annually by AJC for ASEAN countries’ governmental officials, aiming to update them with information and knowledge on the real situation and trends of building investment policies of the Japanese government, the demand of Japanese investors and Japan’s investment environment in a few specific sectors.
This year has witnessed signals of a new investment wave from Japan in Vietnam, according to the stats of the Vietnamese government and surveys by highly prestigious organistions like JETRO. FIA coordinated with AJC to hold the survey for Vietnamese journalists in hope to provide Vietnam’s press circles with direct contacts and exchanges with the opinions of Japanese government agencies, research bases and businesses about the demand of Japanese investors concerning Vietnam’s investment environment, their explicit requirements towards the Vietnamese government so as to improve the quality of the investment environment and predictions of Japan’s investment trends, especially in case of Vietnam in the coming time.
It is one of the information dissemination activities in preparation for Vietnam to receive the investment wave from Japan in particular and from other countries in general after the Asian financial crisis in 1997.
Can you clarify Vietnam’s key directions on promoting investment from Japan?
Japan is one of the crucial investment partners of Vietnam. In terms of total registered capital, Japan now ranks third among the countries and territories with investment in Vietnam but ranks first in actualised capital term. However, this level is lower if compared with that Japan invests in other regional countries like China, Thailand, Malaysia and Singapore. Therefore, to effectively lure direct investment from Japan, it is necessary to meet demands of potential Japanese investors besides improving Vietnam’s investment environment at large.
Strategically speaking, it is important to pay attention to investment from both Japanese large corporations, multinationals and small and medium-size ones as the latter brings promise to the development of large-scale industries and they are also an indispensable link in the system for producing terminal products.
What do you think are favourable conditions and difficulties affecting Japanese investors in Vietnam?
Favourable conditions abound. Vietnam has a stable political and social context; a cheap, abundant, skilful, and highly-adaptive workforce; the lowest production cost in comparison with other ASEAN countries; a big domestic market. Moreover, the two governments have worked closely to ameliorate the investment environment and protecting the interests of Japanese businesses in Vietnam. Specifically, the two countries inked the Agreement of Investment Promotion and Protection in November 2003. In addition , the Vietnam-Japan Joint Initiative was launched in 2003 to improve the investment environment and raise Vietnam’s competitiveness. The first phase of the initiative has been implemented successfully with 85 per cent of the tabled issues being well-tackled by both sides. Its second phase was signed in July.
Regarding difficulties, I think Vietnam’s infrastructure system remains poor; customs procedures cumbersome, and intellectual property rights protection weak; and there is shortage of experienced researchers and engineers. Another weakness is the low development of supporting industries, which constitutes a big hurdle against promoting Japanese investment in manufacture sectors that require developed supporting industries.

How has Vietnam addressed the contradiction between poor development of supporting industries and investment promotion toward Japan?
The awareness of the Vietnamese government on the importance of developing supporting industries has been reflected in the Prime Minister’s Directive 47/2004/CT-TTg dated December 22, 2004 on the measures to increase the competitiveness of industrial products for export and Directive 13/2005/CT-TTg dated April 8, 2005 on some measures to create new changes in foreign investment attraction in Vietnam. The issue of developing supporting industries has also become a content in the Vietnam-Japan Joint Initiative for Phase 1 and 2. Under this initiative, a lot of measures are being implemented by relevant agencies.
First, building an overall zoning plan for the development of supporting industries. The Ministry of Industry is working out general plans for the five industries of automobile, electronics, motorbike, textiles-garments, leather and footwear and these plans will be submitted to the Prime Minister later this year. Second, building industrial parks for supporting industries. Third, constructing a database of the Vietnamese businesses to meet with demand of customers and investors. At present, this database has been completed and publicised online at the website of the Vietnam Chamber of Commerce and Industry (VCCI).

Recently, some foreign press agencies said recent personnel changes in the Vietnamese government might affect the policy on attracting investment from Japan. What is your view?
After meetings with Japanese business representatives in Vietnam and Japan during campaigns for Japan’s investment, I saw no Japanese business mention this concern. It may be that of a few Japanese businesses. In my opinion, the Vietnamese government always sustain a consistent policy on foreign investment in general and on that from Japan in particular. As policy implementers, the government’s leaders will continue the set directions and therefore this concern, if existing, is unnecessary.

What role does AJC play in the promotion of Japan’s investment in Vietnam?
It was set up in 1981 on the basis of the Agreement on Establishing ASEAN-Japan Trade, Investment and Tourism Promotion Centre which was signed between ASEAN members and Japan. AJC’s purpose is to push up the export from ASEAN to Japan and the tourism and investment flows from Japan to ASEAN. AJC plays an important role in assisting FIA in promoting Japanese investment in Vietnam. AJC’s annual assistance work for us includes: Organising surveys on Japanese industries, holding yearly conferences on Vietnam’s investment environment in Japan’s big cities such as Tokyo, Nagoya, Fukuoka, and Osaka, holding Japanese press and business delegations to Vietnam to seek investment opportunities and broadcast the advantages of Vietnam’s investment environment. AJC also launches workshops on capacity building for Vietnamese investment promotion officials. In addition, AJC carries out several other activities such as consultancy, providing free information to Japanese investors who pay heed to Vietnam, operates a library and a website that update information concerning Vietnam’s investment environment, and publishes Japanese publications introducing this environment.