Japan’s FDI in Vietnam has declined over the past few years, with most of the projects being small-scaled and focusing on manufacturing and agricultural sectors. Could we expect another wave of Japanese investment in Vietnam soon, especially when the Trans-Pacific Partnership comes into force? Which industries here are Japanese firms interested in the most?
According to the statistics from the Foreign Investment Agency (FIA), it is true that FDI capital from Japan is in a downward trend while the number of FDI projects from Japan has remained steady over the past 3 years, suggesting that projects nowadays have been smaller-scaled on average.
In fact, many Japanese SMEs in the field of manufacturing are strongly interested in starting businesses here in Vietnam, and it is plausible that this trend would be accelerated after the effectuation of the TPP
We hope that newly-coming Japanese SMEs, in collaboration with the existing Japanese enterprises, would create a favorable condition for the development of supporting industries here in Vietnam. We also hope that Vietnamese enterprises actively take part in the global value chain to enjoy the benefit of economic integration.
In addition, service sector is another field that many Japanese enterprises are seeing new opportunities. The expansion of urban middle class thanks to the sustained economic growth over the past decades has created increasingly attractive market opportunities for many Japanese service enterprises such as retailers and restaurant chains. In the years to come, we have a good reason to expect many Japanese enterprises flock in the service sector in Vietnam.
What is the biggest hurdle Japanese enterprises face in Vietnam? What recommendations have they put forward to better business conditions here?
Not only Japanese enterprises but also other foreign enterprises in general still occasionally face difficulties in running business here in Vietnam, especially cumbersome procedures such as customs and business registration.
We have been working with the Vietnamese government through the Japan-Vietnam Joint Initiative to improve business environment in Vietnam since 2003, which, we believe, has contributed a lot to bringing about more favorable business environment and strengthening the competitiveness of the country.
We expect that we could launch phase 6 of the Japan-Vietnam Joint Initiative very soon. We would like to continue to work with the Vietnamese government to further improve the business climate in Vietnam.
Japanese is among the largest ODA providers for Vietnam over the past two decades. The World Bank plans to cut IDA loans for Vietnam next year and the ADB mulls over halting ADF loans in 2019. What ODA plans does the Japanese government have for Vietnam in the coming years? Which sectors will be prioritized?
In general, a developing country receives less foreign aid as it grows, and private capital replaces foreign aid. This is totally a healthy transition and is also the case for Vietnam as a middle income country. Nonetheless, we still maintain highly concessional ODA loans to Vietnam in the fields of environment, climate change, health, disaster prevention and human resource development.
We also have a special scheme, called STEP, to offer very concessional ODA loans in other sectors than those mentioned above. We hope that the Vietnamese government efficiently utilizes Japanese ODA to contribute to the socio-economic development in the country.
Nhat Tan bridge in Hanoi was built with Japanese ODA. (Photo: Internet)
How do you evaluate the visit by Prime Minister Nguyen Xuan Phuc to Japan last month?
Prime Minister Nguyen Xuan Phuc had a successful meeting with Prime Minister Shinzo Abe on May 28, 2016. It was his first visit to Japan as prime minister and he discussed with his Japanese counterpart a wide range of issues of mutual interest, among them was strengthening economic relationship.
As both Prime Ministers Nguyen Xuan Phuc and Shinzo Abe stressed during the joint press conference, they reaffirmed the need and their will to strengthen the “extensive strategic partnership” between Japan and Vietnam.
On the economic cooperation front, this means continued high-level commitment to Japanese ODA, especially providing quality infrastructure. Building upon the fruitful discussions between our two leaders, we expect to see in the coming years more effective ODA projects as well as stronger private sector involvement by Japanese businesses.
In your opinion, which economic issues does the new Vietnamese cabinet need to urgently deal with to ensure sustainable development?
We agree with the overall ideas presented in the socio-economic development plan 2011-2016 that states SOE reform, financial sector reform, public investment reform as well as agriculture sector reform are priority economic issues that need to be addressed. The Vietnamese government has already identified problems rightly and come up with specific action plans to tackle them.
What is needed now is to implement those plans with steady steps. We would like to continue to closely work with the Vietnamese government on these issues in order that Vietnam can achieve sustainable development.
Thank you very much!