Calling for investment capital from Japanese enterprises

The Japan Trade Promotion Organization (JETRO) has just announced a survey on the status of production and business activities of Japanese enterprises in Vietnam.

According to survey results, in Vietnam, the proportion of enterprises answering "profitable" accounts for 65.3%. The rate of return for businesses established before 2010 is stable at over 80%, which shows that long-term investment is profitable.

"With about 70% of Japanese enterprises investing in Vietnam with the motto of business expansion, compared to other countries, the likelihood of wanting to continue to expand is relatively high. Even for businesses established before, in 2010, 67.1% also said that they had expansion plans, indicating that Vietnam continues to be an important investment destination.

The main reason for the business expansion is to increase revenue and to expect high growth potential, high potential, "JETRO said.

In terms of the advantages of the investment environment, Japanese businesses also assess the market size, the ability to grow as the biggest advantage, followed by cheap labor costs.

However, the survey results also show that Japanese businesses are concerned about the incomplete legal system, unclear operation (48.2%), salary increase (50%), difficulties in purchasing raw materials, accessories, and quality control. Complicated tax mechanisms and procedures, often changing, there is no clear policy for the development of the auto industry, price transfer tax, personal income tax ... is a risk factor when doing business and investing in Vietnam.

According to JETRO, the localization rate of Vietnam has reached 36.5%, the highest among the surveyed countries. Since 2010, the localization rate has gradually increased every year, but compared to China, Thailand and Indonesia, it is still low. Compared to other countries, the buying rate from other countries (other than Vietnamese and Japanese enterprises) is quite high, but looking back at the number of purchases from domestic enterprises in Vietnam in the past 10 years, the rate of 14.4 % is low and Vietnamese domestic firms still have room for improvement.

Regarding the export situation, the proportion of Japanese enterprises in Vietnam "exporting 100%" of Vietnam compared to previous years tends to narrow and shift to domestic consumption.

The rate of application of free trade agreements by Japanese enterprises in Vietnam is 47.5%.

Japanese enterprises believe that the minimum wage increase rate of Vietnam as planned in 2019 is 7.1%, although the cost of labor is low, the cost of labor in the manufacturing industry will increase quite rapidly, the industry Non-manufacturing also outperformed Indonesia. Labor fees for both manufacturing and non-manufacturing industries are gradually closing the gap compared with advanced countries.

The trend of applying technology related to Internet of Things (IoT) which is increasingly chosen by Japanese businesses is also an issue that needs to be developed.

Accumulated to February 20, 2019, the whole country has 27,900 valid projects with a total registered capital of 344.9 billion USD. In which, Japanese investors ranked second with 56.7 billion USD (capturing 16.4% of total investment capital), only after Korea.