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  Foreign Investment

Vietnam: Destination for Japanese investors

Japanese investors in both Japan and China are thinking of investing in Vietnam, said Kyoshiro Ichikawa, a Japan International Cooperation Agency (JICA) senior expert, at a conference on Vietnam-Japan Joint Initiative activities recently opened by the Vietnam Ministry of Planning and Investment (MPI) and JICA.

The Vietnam-Japan Joint Initiative, an idea of both the Vietnamese and Japanese Prime Ministers in 2003, was created to improve the investment environment in Vietnam and attract more Japanese investment to Vietnam. Vietnam has so far carried out 85 percent of the recommendations set forth in the initiative.

An improved investment climate

Oshikiri Koji, deputy chief representative of JICA in Vietnam, said that Vietnam has made remarkable progress and has bettered its investment environment. Some major changes: charging Vietnamese and foreigners the same for electric power usage and dropping the visa requirement for Japanese citizens visiting Vietnam for a short period of time. A new investment law and a new enterprise law, ratified by the National Assembly in 2005, are due to come into effect on 1 July, 2006.

Takao Fujii, a former general director of Panasonic AVC Vietnam who has been living and working in Vietnam for 11 years, said that major positive changes in the Vietnamese investment environment are due to the Vietnamese Government listening to businessmen's opinions and then adapting its policies to actual development trends.

The implementation of the joint initiative's second phase will begin in June 2006 and continue until the end of 2007. According to the Foreign Investment Agency under the MPI, the second phase is to lead to further changes in investment conditions so that Vietnam and Japan can strengthen bilateral investment relations and confront the problems that Japanese businesses in Vietnam are now dealing with.

The MPI statistics reveal that, Japanese investment to Vietnam increased from 136 million USD into 2003 to 784.8 million USD in 2004. It was 913.9 million USD in 2005 and is estimated to reach 1 billion USD in 2006.

Since last November, when representatives of the MPI returned to Vietnam after finishing an investment promotion trip to Japan, Canon, Matshusita, and Brother Industry have all started construction on new projects.

Attracting big investors is very important because these major investors will, in turn, attract other, smaller investors that will have business relations with the bigger investors.

At investment conferences in Tokyo, Osaka and Nagoya, sponsored by the MPI in late February 2006, representatives of leading Japanese groups in construction, mechanical engineering and information technology expressed an interest in coming to Vietnam. These include investors that have billions of US dollars now invested in China, Thailand and Singapore.

Many Japanese investors in Vietnam have asked if they could increase their investment capital. In March of this year, the Ministry of Planning and Investment issued a license to the Panasonic Group so they could build a third factory at a cost of 76 million USD. The group's two other factories were built at a cost of more than 100 million USD.

Japanese investors say that Vietnam will have to further improve its investment environment if it wants to attract more FDI. Takao Fujii said that a number of leading foreign businesses went to Vietnam to look into the investment environment here - and then decided to do business in Thailand. However, Vietnam has a large, cheap labor force, stable politics. China and Thailand have their strengths and weaknesses and so does Vietnam and it’s important that a country bring into play its strengths and minimise its weaknesses, Takao Fujii said.

Okuda Hiroshi, president of the Nippon Keidanren, said that Vietnam is a very attractive destination for investors from Japan and every other country and territory. “After meeting and talking with Vietnamese authorities, I see that they really do want to see the Vietnamese investment environment improve. I think that Vietnam could be not only a good place to set-up a production base; it is itself a promising market. I believe that in the future Vietnam will become one of the fastest-growing economies not only in ASEAN (Association of Southeast Asian Nations) but also in all of Asia”, he said.

Masato Otaka, the director of the Japanese Chamber of Commerce in Southeast Asia, also said that Vietnam had made considerable progress in administrative reform. Vietnam's legal and administrative reform in recent years has helped the country attract more Japanese investment. The considerable progress in administrative reform is encouraging many foreign businesses to invest in Vietnam.

Communist Party of Vietnam - (18/04/2006)

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