Japanese enterprises are keeping their eyes on Vietnam as a new investment area, which has great potential for development as the country has maintained stable economic development and security, said Governor of Japan’s Hyogo prefecture Ido Toshizo.

Vietnam-Japan ties are developing rapidly in every field and entering into a new stage of closer relationship.

Economically, Japanese enterprises consider Vietnam the most attractive destination for investment and business in Southeast Asia, especially after Vietnam won World Trade Organisation (WTO) membership on January 11, 2007, becoming a magnet for Japanese enterprises seeking investment opportunities in the country.

Japan is generally seen as Vietnam’s leading trade partner along with China.

Bilateral export-import turnover increased from US$4.5 billion in 2000 to more than US$8.5 billion in 2005. Last year, two-way trade value reached US$9.9 billion, up 16.8 percent from a year earlier while during the past five months of this year, the figure hit US$4.2 billion, up 8.0 percent compared to the same period last year.

According to Nguyen Bao, Head of the Asia Pacific Department under the Ministry of Industry and Trade, Vietnam’s export turnover to Japan reached US$5.2 billion in 2006, an increase of 18.6 percent from 2005 and Japan continues to be Vietnam’s second largest export market. Currently, Vietnam’s exports to Japan account for approximately 1 percent of Japan’s import market. Many Japanese enterprises are moving their investments to Vietnam by opening more and more companies, representative offices and sub-branches in the country.

Notably, Vietnam’s exports have increased both in turnover and in the structure of export items among which are fresh flowers, high-grade garments and processed food to the Japanese market. In addition, the total export turnover of Vietnamese final products in such areas as seafood, mechanical engineering and information and technology is increasing.

Japan now ranks third among countries and territories investing in Vietnam in terms   of disbursed capitalisation for 735 valid projects at a total value of US$7.4 billion.       

Exports of garments and textiles hit US$627 million in 2006, an increase of 3.9 percent compared to 2005. In the first five months of 2007, export earnings rose to US$271 million, up 10.7 percent against the same period last year.

It is expected that in the coming period, Japanese garment and textile importers will shift their orders from China to Vietnam as Vietnam has become a full member of the World Trade Organisation and quotas have been lifted.

Japan is the biggest ODA (official development assistance) donor to Vietnam. From 1992 to 2005, Japan gave US$11 billion in ODA to Vietnam, accounting for 30 percent of total ODA commitment to Vietnam by the international community. In 2006, Japan   pledged to provide US$850 million in ODA to Vietnam, up 9 percent compared to 2005. 

In terms of wood and wooden products, exports to the Japanese market are increasing at a rapid rate. Vietnamese wood and wooden products have a 8.3 percent share of the Japanese market and the figure is expected to be higher in the coming years.

Nguyen Bao attributed Vietnam’s growing exports to the Japanese market to the effective implementation of the investment agreement and the action plan of the Vietnam-Japan Joint Initiative and the upcoming signing of the Vietnam-Japan Economic Partnership Agreement.

More Japanese companies want to do long-term business in Vietnam and boost the export of made-in-Vietnam products, particularly manufacturing products, to their country.

Japanese ambassador to Vietnam, Hattori Norio, shared the same view with Mr Bao, saying that the Vietnamese government’s efforts have paid off through Japanese investment in Vietnam.

In a recent report, Ido Toshizo expressed his optimism about Vietnam’s investment environment. He stressed that many Japanese companies are showing their keen interest in doing business in Vietnam. Some businesses in Hyogo prefecture have invested in Vietnam and more are expected to come to the country soon. Japanese investors are turning to Vietnam as a new investment destination in the region.

Vietnam and Japan have agreed to bring two-way trade turnover to US$17 billion by 2010. The two countries have begun negotiations on the Vietnam-Japan Economic Partnership Agreement (EPA) aimed at liberalising trade, investment and economic ties on a larger scale. Therefore, trade turnover between the two countries is expected to increase remarkably after the EPA is signed and comes into effect. (VOV)