Vietnam becomes preferred investment destination for Japanese corporations

Vietnam is increasingly resonating with Japanese investors, according to insights shared at the recent Investment and Trade Promotion Seminar in the Mekong Delta city of Can Tho in late June.

Nobuyuki Matsumoto, chief representative of the Japan External Trade Organization (JETRO) in Ho Chi Minh City, emphasised a significant surge in Japanese corporations' investment interest in the nation.

Matsumoto revealed the findings of JETRO's annual survey, which queries Japanese companies about their expansion and investment aspirations. Until 2020, the dominant investment focus had been China. However, a trend shift occurred in 2021, with Vietnam outstripping China as the favoured destination for Japanese firms.

Remarkably, around 60 per cent of the surveyed businesses disclosed an intention to venture into the Vietnamese market within the next two years – the highest level of interest across Southeast Asia.

"The pandemic unveiled the frailties in supply chains that are overly reliant on one particular country. In an era of increasing diversification, Vietnam appears as a compelling investment destination for Japanese entities," Matsumoto opined.

The attraction towards Vietnam is substantiated by actual investment figures. From January through to May, Japan ranked second to only Singapore in terms of foreign direct investment in Vietnam. This trend is particularly discernible in the country's southern provinces, with considerable investments made in Ho Chi Minh City, Binh Duong, Dong Nai, Long An, and Ba Ria-Vung Tau.

Equally positive about Vietnam's investment potential was Tomoyuki Kawata, deputy general director of Manufacturing, Supply Chain, and Technology Transfer at Hau Giang Pharmaceutical JSC – based in Can Tho. He underscored the nation's robust economic growth and an anticipated expansion of the pharmaceutical market, which amounted to approximately VND166 trillion (around $6.92 billion) in 2020.

As the third most populous country in Southeast Asia, Vietnam showcases tremendous promise as a consumer market, alongside being an appealing manufacturing hub. The country's population, presently standing at 100 million, is projected to surpass Japan’s by 2040. Furthermore, competitive labour costs and advantageous land rental rates in industrial parks offer substantial operational cost benefits.

Such investment appeal is epitomised by the strategic move of Taisho Pharmaceutical Group, a non-prescription drug manufacturer in Japan. In 2016, Taisho established a strategic alliance by acquiring a 24.5 per cent stake in Hau Giang Pharmaceutical JSC – the largest domestic pharmaceutical company in Vietnam.

The investment was further amplified to 51.1 per cent in 2019, rendering Hau Giang a consolidated subsidiary of Taisho.

Japanese firms plan to boost investment in Vietnam A series of Japanese enterprises plan to pour money into Vietnam as part of the expansion of industrial parks invested by Sojitz Corporation.

Swiss investors eyes Danang as potential investment destination Danang, the third important economic hub of Vietnam, is emerging as a potential investment destination for Swiss investors, according to a Business Seminar “Danang – A future financial center” held on May 24 in Zurich, Switzerland.

Vietnam remains a popular destination for supply chain diversification Vietnam was highlighted as a growing significant destination for supply chain diversification among China and other countries at the event themed 'Beyond Boundaries - China and Vietnam Supply Chain Opportunities' held on June 14 in Shanghai.