Vietnam central to ASEAN-Japan ties

AEON MALL Vietnam, illustration photo

Entering Vietnam in 2009, AEON MALL Vietnam currently has four malls, and is planning to open another one in the beginning of December 2019 and another in the summer of 2020.

“We set the target to have 20 malls across the country by 2025. If possible, we would like to have nine malls in the southern region, eight in the north, and three in the central region by then,” Iwamura Yasutsugu, general director of AEON MALL Vietnam, told VIR. “After that, we will continue to look for more projects and invest further in the Vietnamese market.”

According to Yasutsugu, AEON in Japan named Vietnam as its most important market.

“We will do our best to invest more in this potential market. Besides, compared to other ASEAN countries, there are many similarities between the Vietnamese and Japanese lifestyle,” he added.

Meanwhile, established in 2008, IT firm NTT Data Vietnam is planning to expand in the country, where the company is providing software, applications, and research consultancy. 

“The government and the banking system in Vietnam have shown an initiative to shift to Industry 4.0. Besides, many foreign companies have started operations in Vietnam where there are a lot of potential talented IT resources,” Norihiko Muratake, general director of NTT Data Vietnam, told VIR.

According to the Ministry of Planning and Investment (MPI), in the first five months of 2019, Vietnam attracted 165 new Japanese projects with the registered capital of $732.08 million, and 80 operating projects increased capital with $474.1 million.

Japan was the fifth-largest foreign investor in Vietnam with the total registered capital of $1.52 billion in the first five months of 2019. Meanwhile, in 2018, Japan was the largest investor by registering nearly $8.6 billion in investment capital in the country.

Kavi Chongkittavorn, senior advisor from the Economic Research Institute for ASEAN and East Asia, told VIR that compared to other regional nations, Vietnam is the most outstanding investment destination.

“After joining the ASEAN, Vietnam has mapped out a strategy to integrate into the regional economy with regulatory changes, creating an open environment for investors,” he said. “Within the ASEAN, Vietnam is more comprehensively integrated into the global market than others thanks to its 12 free trade agreements (FTAs), with partners including developed nations, while other nations have fewer FTAs. For example, Thailand only has six.”

Echoing this view, Kitagawa, chief representative of the Japan External Trade Organization (JETRO) in Hanoi, said that Vietnam remains quite an attractive ASEAN market to Japanese investors and businesses in 2019 thanks to competitive human resources, stable economic and market growth, and a dynamic society characterised by a high level of consumption and young, diligent population.

“In the eyes of Japanese enterprises and investors, Vietnam ranked fourth in political and social stability, with affordable labour costs while its market size and growth took the sixth position in the ASEAN,” ­Kitagawa said.

Moreover, he also thought that Japanese investors can benefit from Vietnam’s expanding economic ties with countries across the world.

Kitagawa cited a recent JETRO survey on investment trends among Japanese businesses operating in Vietnam showing that in the 2018 fiscal year, nearly 70 per cent of Japanese investors want to expand operations in Vietnam after reporting good business performance last year. Besides, 65.3 per cent of the total of 723 Japanese companies recorded high profit in Vietnam last year.

Tang Siew Mun, director of ISEAS-Yusof Ishak Institute – a Singaporean statutory board and research institution – said that there has been growing foreign investment, particularly Japanese investment, moving to Vietnam. “As the close neighbour of China, Vietnam has the most positive impacts from the United States-China trade conflict as compared to other Southeast Asian countries,” he said.

“With the current FTAs, including the ASEAN-Japan Comprehensive Economic Partnership and the Japan-Vietnam Economic Partnership Agreement, Vietnam is much more attractive to investors, including Japanese ones,” Mun added.

According to the official website of the ASEAN, Japan has been the key trade and investment partner of the bloc over the years.

“Trade between the ASEAN and Japan reached $217.9 billion in 2017, ­accounting for 8.5 per cent of the ASEAN’s total merchandise trade, and placing Japan as the ASEAN’s fourth-largest trading partner,” the website stated. “Japan was the ASEAN’s second-largest external source of foreign ­direct investment (FDI) in 2017 with $13.2 billion, accounting for 9.6 per cent of total FDI flows into the ASEAN.”

Meanwhile, the MPI’s statistics showed that in 2017, Vietnam received $9.1 billion in FDI from Japan, accounting for 68.9 per cent of the total FDI from Japan to the ASEAN.

Japan has been the ASEAN’s partner since 1973, and elevated its relation to strategic partnership with the bloc 30 years later. It is currently the leading official development assistance provider for the countries in the region.

Addressing the recent symposium on ASEAN-Japan Co-operation for ­Prosperity which was organised in Hanoi earlier this month, Minister and Chairman of the Vietnamese Government Office Mai Tien Dung stated, “Vietnam would like to see Japan continue to ­support ASEAN countries in general and Vietnam in ­particular in developing high-tech industries and more effectively exploit the ASEAN-Japan Comprehensive Economic Partnership.”