Japanese investors continue selecting Vietnam

14:05 | 03/03/2014 Investment

(VEN) - Together with advantages in terms of political stability, abundant labor force and low labor costs, 70 percent of Japanese companies are looking forward to expanding business in Vietnam.

Japan External Trade Organization (JETRO) Hanoi Chief Representative Atsusuke Kawada when addressing a ceremony to announce the results of a JETRO survey on Japanese business trends said that Japanese companies would like to invest in Vietnam.

According to a survey on business activities of Japanese companies in Asia and Oceania, about 60-70 percent of companies made profits. In Vietnam, the number of Japanese companies that achieved good profits reached 59.9 percent. In terms of the investment environment, over 70 percent of Japanese companies still faced difficulties when investing in countries in Asia and Oceania such as rising labor costs, complex administrative procedures, inconsistent and unclear policies, complicated customs procedures, incoherent legal systems and poor transport infrastructure. In Vietnam, Japanese companies paid special attention to legal policies, administrative procedures, taxes, customs procedures and increasing labor costs.

Underdeveloped support industries remained a weakness for Vietnam’s investment environment. Compared to other countries in the region, the localization rate of Japanese companies in Vietnam reached just 32.2 percent in 2013 while the figures for China, Thailand and Malaysia stood at 64.2, 52.7 and 42.3 percent respectively.

Another drawback of Japanese companies when investing in Vietnam was an increase in the minimum wage. Vietnam’s minimum wage increased by 21 percent in 2012 and 12.2 percent 2013 compared to China’s 11.7 and 9.2 percent in and Thailand’s 13.4 and 6.4 percent in 2012 and 2013 respectively.

Despite an increase in the minimum wage, Japanese companies said salaries in Vietnam were much cheaper than other countries. Japanese companies paid US$24,179, US$7,795 and US$7,503 per year for each worker in Singapore, Malaysia and China respectively while those companies paid US$3,000 per year for each worker in Vietnam. In addition, the salary per engineer in Vietnam reached US$5,749 per year while the figure sin Singapore, Malaysia and Thailand stood at US$48,744, US$17,425 and US$12,560 per year respectively. Cheaper labor costs remain an advantage of Vietnam.

Thanks to advantages in terms of political stability, abundant labor force and low labor costs, 70 percent of Japanese companies are looking forward to expanding business in Vietnam. This number is higher compared to other countries in the region such as Thailand, Philippines, China and Malaysia. Japanese companies would like to invest in the manufacturing and processing industry and software in Vietnam in the coming time.

However, Vietnam needs to make greater efforts to improve the investment environment. According to Atsusuke Kawada, to attract more Japanese companies, Vietnam needs to simplify administrative procedures and prioritize the development of support industries./.

By Chu Hoa

Theo ven.vn