New investment trends

Over the past two years, Japanese investment in Vietnam has slowed. However, experts believe this slowdown is only temporary, and the investment flow into Vietnam will accelerate because most Japanese businesses view Vietnam as a key investment market.

According to the Vietnam Foreign Investment Agency (Ministry of Planning and Investment), as of the end of June 2022, Japan registered over US$65 billion in Vietnam, ranking third among countries and territories with significant investments in the country. In 2021, Japanese investors registered to invest in the O Mon II Thermal Power Project, with total registered capital of US$31 billion and in the Vina Kraft Paper Factory with US$611.4 million. Meanwhile, the Sumitomo Group is working on phase II of Thang Long Industrial Park (Hung Yen Province) and the Van Phong 1 BOT Thermal Power Project.

Major brands, namely UNIQLO and MUJI, recently accelerated their investment in Vietnam and have once again confirmed the new investment trend of Japanese investors focused on retail, finance and banking, instead of just industrial production as was the case in the past.

Key investment location

Matsumoto Nobuyuki, head of the JETRO Office in Ho Chi Minh City, said Japan's trade and investment relationship with Vietnam will accelerate again now that the COVID-19 is under control because Vietnam is an important investment location.

Regarding Asia, the percentage of Japanese enterprises that want to expand their business in Vietnam is only behind India, Bangladesh, and Pakistan. In contrast, the rate of contraction of Japanese enterprises in Southeast Asia is only 2.2 percent in Vietnam, while the figure for the whole of Asia is second to Pakistan. Japanese firms have been pouring more investment into the industrial sector in many provinces and cities to establish product supply centers for Southeast Asia.

General Director of Japan’s Justin Joint Stock Company Shuji Oida said his company specializes in manufacturing gaskets for many industries worldwide. Justin is now looking for opportunities to establish a new production plant in Dong Nai Province to supply products to the domestic market as well as other Southeast Asian countries. All of the company's factories have modern production lines and top-quality Japanese products.

According to Hiroyuki Ishii, General Director of Long Duc Investment Company Limited of Sojitz Group (Japan), Sojitz Group invests in the technical infrastructure of the Long Duc Industrial Park (Dong Nai Province) and helps secondary investors sublease land to build factories. The industrial park has attracted 66 foreign enterprises, most of which are Japanese. The industrial park is completing procedures to expand and provide more room for Japanese enterprises and others to rent land for investment and factory expansion.

Since 2021, the Japanese Ministry of Economy, Trade and Industry has implemented a policy of assisting Japanese businesses in diversifying their supply chains abroad. Through five rounds of aid project selections, Vietnam has accounted for the most significant number of selected projects, with 41 out of 103, reflecting the level of Japanese interest in Vietnam.

Ngoc Thao