Vietnam Becomes Japan’s Top Destination for Investment Hike: Research

Tuan Minh

16:00 02/06/2016

BizLIVE - Vietnam has become the top destination among Japanese companies specifically thinking of shifting manufacturing out of China, according to a think-tank. 

Vietnam Becomes Japan’s Top Destination for Investment Hike: Research

Cargo is being loaded at Hai Phong Port. (Photo:

Vietnam is by far Japanese firms’ favorite destination for increased investment among the 12 signatories to the U.S.-brokered Trans-Pacific Partnership (TPP) deal, Financial Times quoted a report by the Mizuho Research Institute as saying.
According to Financial Times, Japanese companies have been ramping up investment in Southeast Asia as labor costs surge in China and disputes with Beijing rumble menacingly in the background.
Since anti-Japanese protests broke out in big Chinese cities in 2012, the pace of Japanese investment in ASEAN has intensified dramatically, some of that at the direct expense of expansion in China.
Japanese FDIs into ASEAN last year reached more than $20 billion, according to government data, and exceeded FDIs into China and Hong Kong for the third year running.
The Japan External Trade Organization (JETRO) found that the proportion of Japanese companies operating overseas with plans to expand operations in China had fallen below 40% for the first time since the survey began in 1998.
Mitsui OSK Lines, Japan’s biggest shipping company, is investing in a $1.2 billion container port expansion in the Vietnamese northern coastal city of Hai Phong in the latest bet on a gravitational shift of manufacturing from China to Southeast Asia.
The port project, which is being jointly undertaken by the Vietnamese government and others, will start operations in 2018 and double the capacity of the existing port that serves the growing electronics hub near Hanoi, according to the newspaper.
Junichiro Ikeda, Mitsui OSK president, said that his company’s decision was a response to the rising number of Japanese manufacturers closing factories in southern China and moving production to the lower-cost hubs of Vietnam.
Rajiv Biswas, Asia Pacific Chief Economist at IHS Global Insight, said that Mitsui’s move fitted closely with the broader rethink on investment plans amid forecasts that combined gross domestic product of the ASEAN nations will rise from $2.6 trillion now to $5.8 trillion by 2025.
Japan’s FDI in Vietnam totaled $1.84 billion in 2015, being the third-largest investor in the country after South Korea and Malaysia.
As of the end of last year, Japanese firms had put $38.41 billion in projects in the Southeast Asian country, according to the Foreign Investment Agency under the Ministry of Planning and Investment.