Japanese investors are highly interested in Viet Nam

Cooperation in decarbonization will also be discussed at the Commemorative Summit for the 50th Year of ASEAN-Japan Friendship and Cooperation.

As Viet Nam aims to become carbon neutral by 2050, the use of LNG and renewable energy is mentioned in PDP8, and many Japanese Investors see this as a great business opportunity for Japan as well. 

As the DPPA and carbon credits begin to make concrete progress in the future, we hope that many bilateral cooperation projects will make progress.

To be honest, there was not as much investment in 2023 as had been expected: looking at FDI in Viet Nam in the January-November period of 2023, overall FDI increased by 14.8%, but the amount of investment from Japan decreased by 32.5%.

This is believed to be largely due to the impact of the global economic recession and the depreciation of the yen. In particular, the depreciation of the yen has had a significant impact, weakening the yen by 43% compared to three years ago, greatly reducing the desire to expand overseas.

However, looking at the number of investments, the opposite is true, with a 23.3% increase. The number of visitors to JETRO continues to be high, suggesting that interest in Viet Nam is still very high.

According to a survey conducted by JETRO in August 2023, interest in Viet Nam also remains high, with 56.7% of firms indicating that they plan to expand their business in the next 1-2 years.

This is higher than the ASEAN average of 47.5% and second only to Laos (63.3%). By industry sector, 47.1% of the manufacturing sector responded that they will expand their business, a decrease of 7.3 points from the previous year. In particular, there was a significant decrease in the willingness to expand in the rubber/ceramic/stones and textile/clothing sectors. The sectors with the highest willingness to expand were foods (80.0%), transportation equipment (75.0%), and chemicals and pharmaceuticals (70.8%). On the other hand, the non-manufacturing sector decreased 0.4 percentage points from the previous year to 65.5%. Supported by domestic demand, the retail industry accounted for 100%, followed by the finance/insurance at 92.3% and the trading/wholesale at 80.8%.

Both manufacturing and non-manufacturing industries cited expanding local market needs and increasing exports as reasons for business expansion. As for the functions to be expanded, many companies in both the manufacturing (58.2%) and non-manufacturing (64.5%) industries cited the sales function, while almost as many companies in the manufacturing industry cited the expansion of the production function for high value-added products (50.8%) and general-purpose products (49.7%). 

Based on the above results, although it will depend on the speed of the global economic recovery and the degree to which the yen's depreciation improves, it is expected that investment from Japan in 2024 will be focused on targeting domestic demand in Viet Nam.

There is no magic way to attract investment. The most important thing is to steadily improve the investment environment. Specifically, it will be important to further accelerate and disseminate information about the various initiatives that the Vietnamese government has been undertaking to date, such as improving the efficiency and transparency of administrative procedures, developing various types of infrastructure, fostering high-level industrial human resources, and fostering supporting industries./.