Vietnam-Japan: Trade pacts boost Hanoi development

14:39 | 11/08/2017 Cooperation

(VEN) - Japan is an important strategic partner of Vietnam and the two sides have signed many bilateral agreements as well as participated in multilateral trade agreements, such as the ASEAN-Japan Comprehensive Economic Partnership (AJCEP) and the Japan-Vietnam Economic Partnership Agreement (JVEPA). The effects of these agreements has contributed to promoting Hanoi’s economic growth.

vietnam japan trade pacts boost hanoi development

Significant export increase

Hanoi’s industrial production value increased continuously from VND83.268 trillion in 2011 to VND116.451 trillion in 2015, reaching an average growth rate of 10.9 percent per year. During the 2010-2015 period, the structure of industries in Hanoi changed, with an increase in the proportion of processing and manufacturing sector and a drop in the proportion of mining.

Thanks to the implementation of trade agreements between Vietnam and Japan, Hanoi’s export turnover to Japan increased to nearly US$1.4 billion in 2014, a 1.8-fold increase compared to 2009.

The registered capital of FDI companies in Hanoi continued to increase from US$216 million in 2009 to US$470 million in 2010 and US$1.4 billion in 2015. By February 2017, Japan became Hanoi’s key investor with a total of 822 projects worth US$5.2 billion. Due to increased sales and profits, more than 60 percent of Japanese companies have expressed their wish to expand business in Hanoi.

During the 2010-2015 period, export turnover of FDI companies in Hanoi increased from US$2.592 billion in 2009 to US$3.63 billion in 2010 and US$5.221 billion in 2015, accounting for about 50 percent of the capital’s total export turnover.

Trade agreements between Vietnam and Japan have had a positive impact on Hanoi’s economic development. Specifically, they have contributed to strengthening the capital’s FDI attraction and promoting the adjustment of international trade policies in line with trade liberalization and international commitments. In addition, it has created favorable conditions for Vietnam in general and Hanoi in particular, to acquire knowledge, technology transfers and management experience from foreign experts.

Higher added value

vietnam japan trade pacts boost hanoi development

The Hanoi People’s Committee issued Decision 4137/QD-UBND dated July 7, 2017 approving a project on developing Hanoi’s economy in the context of trade agreements between Vietnam and Japan by 2020. The project aims to assess the effects of implementing the trade agreements for the capital’s economic development so as to propose measures and recommendations to help businesses make the most of the advantages and potential they offer and to minimize challenges.

Regarding industrial development, Hanoi will continue to develop and improve the list and incentive mechanisms for industries in which both Hanoi and Japan have advantages, such as engineering, metallurgy, thermal power, chemicals and high technology. In addition, the capital will selectively develop support industries for the manufacturing of mechanical components, spare parts for automobiles and motorbikes, electronics, garment and textile, and footwear materials. The city plans to focus on adding more mechanisms to encourage cohesion between Vietnamese and Japanese businesses through investment projects to produce and export industrial products in the global value chain, creating higher added value for its industrial production.

For the group of solutions to promote exports to the Japanese market, Hanoi will adopt policies to encourage specific development of key export products, and provide technical support for businesses to apply quality management systems and standards in production.

Hanoi will focus on improving its investment and business environment and enhancing its standing in the provincial competitiveness index ranking in order to attract more Japanese capital, including for infrastructure projects.

A project assessing the effects of trade agreements between Vietnam and Japan is intended to measure their contribution to Hanoi’s economic development and propose measures to help businesses make the most of the advantages and potential they offer.