With durable diplomatic relation, the momentum of Vietnam – Japan Free Trade Agreement (VJFTA), Vietnam – Japan Economic Partnership Agreement (VJEPA), ASEAN-Japan Comprehensive Economic Partnership Agreement (AJCEP) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Vietnam-Japan trade and investment relation has been boosted magnificently.
The amount of Vietnam-Japan trade is spiking, year-on-year, by 12.7% on Vietnamese imports from Japan and 14.9% on exports to Japan (year by year change, October 2018). Japan is also one of the four markets to which Vietnam’s export turnover exceeded the US$10 billion benchmark. Especially, Vietnam enjoyed a trade surplus of US$141 million in two-way trade with Japan so far this year.
There is plenty of room for more growth, as Vietnamese imports from Japan are still only 8% of total import, and exports are only 7.8% of total export.
“Japanese market entry”
Following an as yet report of Vietnam Ministry of Investment and Planning, Vietnamese investors has invested totally USD7 million with 35 projects in Japan. The figures seem small, however, Vietnamese-invested enterprises have reap a harvest. Notably, FPT Vietnam – a science and technology company has been operating effectively in Japan. Other Vietnamese-invested companies try actively to expand their scales, likewise.
The government of Japan tends to change investment policy to attract an amount of USD 300 billion capital in 2020. Hence, it is the chance for Vietnamese investors to start out their presence in this well-established market.
“Vietnam is the first choice indeed”
According to a survey by the Japan External Trade Organization (JETRO), up to 70% of asked Japanese enterprises want to invest in Vietnam and 66.6% of Japanese enterprises operating in Vietnam plan to expand their production and business activities.
On the rise of money poured into Vietnam, Japan is still on the top of countries investing in Vietnam with the total value of over USD57 billion, accounting for 16.7% of foreign investment capital in Vietnam.
Vietnam is truly a growth market for Japan, which can increasingly shift business to the country as commitments in China are wound down. China’s increasingly inimical approach to regional and international sovereignty, politics and trade is bringing about investors, importers, and exporters to diversify risks away from China and into other markets. Vietnam is the first choice indeed.
Japanese enterprises in Vietnam is one team with the motto “expanding operations”. They are also expected to continue to receive incentives and support from the Vietnamese government, including efforts to break through the barriers and reduce risks faced by foreign invested enterprises, such as labor costs increase, unclear enforcement of legal system, taxation and taxation procedures or complicated administrative procedures.
Actually, Vietnamese government has done a lot and Japanese-investment enterprises’ concerns have been satisfied substantially.
After a long while of discrimination between domestic investors and foreign investors, unified law on investment and revised versions, from time to time, are instituted to suit the investment. At the moment, no discrepancy in investment to be found under Vietnamese laws.
Japanese officials are working with their Vietnamese counterparts to continue the process of gradual enhancement to Vietnam’s political and economic conditions that began over 3 decades ago. Definitely, there will be continued bumps in the road of Japanese investment and trade with Vietnam, resulting to consistent increase of FDI flows to Vietnam since 2015 and in the future. If you want to find out more about doing business in Vietnam, don’t hesitate to contact us.
Luu Xuan Vinh, Managing Partner, Asia Legal
Nguyen Thanh Nghiep, Legal Consultant, Asia Legal
Asia Legal is a Vietnamese full service business and legal consulting firm providing creative and practical solutions for navigating both legal and commercial practices with local insight
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1: Anders Corr, China Conflict Increases Opportunities for Japan-Vietnam Trade and Investment, published at: https://japan-forward.com/china-conflict-increases-opportunities-for-japan-vietnam-trade-and-investment/
2: General Department of Vietnam Customs, Vietnam – Japan Import, Export in 2017 and the first 4 months of 2018, published at: https://www.customs.gov.vn/Lists/ThongKeHaiQuan/ViewDetails.aspx?ID=1393&Category=Ph%C3%A2n%20t%C3%ADch%20chuy%C3%AAn%20%C4%91%E1%BB%81&Group=Ph
3: Vietnamese enterprises investing in Japan: New opportunities, published at: http://fia.mpi.gov.vn/tinbai/4996/Doanh-nghiep-Viet-Nam-dau-tu-sang-Nhat-Ban-%E2%80%8BNhieu-co-hoi-moi
4: Foreign Investment Agency, Statistics of foreign investment in Vietnam 2018, published at: http://fia.mpi.gov.vn/tinbai/6110/Tinh-hinh-thu-hut-Dau-tu-nuoc-ngoai-nam-2018
Image: Foreign Investment Agency, Statistics of foreign investment in Vietnam 2018, published at: http://fia.mpi.gov.vn/tinbai/6110/Tinh-hinh-thu-hut-Dau-tu-nuoc-ngoai-nam-2018