Even not in Top 3 FDI in Q1, Japanese Corporations still invest strongly and long-term in Vietnam
Leaving the top 3 FDI inflows in Q1/2018, Japan remains the leading FDI “Asian Tiger” by sectors and clusters, according to FDI market – Foreign Investment Agency (Mistry of Planning and Investment)
Industry, processing, manufacturing attract large projects.
According to Q1 report/2018 of Foreign Investment Agency (MPI), in term of FDI partners, capitals of new registrations, increase the current commitments and capital contribution, share repurchase in first 03 months of the year reached 5.8 billion USD, total disbursed capital is 3.88 billion USD. Three leading countries of FDI this time is Korean – No 1 investor in Viet Nam in 2017, followed by Hong Kong and Singapore.
It can be seen that Asian countries have been standing in the top 3 FDI in Vietnam for many years, and they have maintained their leading positions or surpassed by large-scale industrial investment projects.
Typically, South Korea has a factory project LG Innitek Hai Phong adjusted to increase investment capital 501 million USD, Kefico VN (joint venture with Germany) adjusted the total investment capital of 120 million USD; Hong Kong has a project of Regina Miracle International Vietnam Co., Ltd. increased capital to $ 260 million; Singapore has a licensed $ 150 million Hanbaram wind power plant project.
Japan, the second largest FDI investor in Vietnam in 2017, despite temporarily withdrawing from the top 3, still has a large accumulated capital (after South Korea) with a total registered capital of over USD 50 billion and the cumulative number of about 3,700 investment projects
Japan still has a high proportion of FDI origin
Especially, in the process of long-term FDI investment, according to the draft FDI attraction strategy for 2018-2018, which is being consulted by the Foreign Investment Agency for the second time, Top 14 leading countries of FDI origin by sector and strategic clusters, Japan still topped the “Asian tiger” pouring capital into Vietnam, accounting for 22.4% of origin, standing before the US, UK, Germany, Korea and Singapore (source: FDI Markets 2017-Draft).
According to the calculation from the FDI Markets database to the end of 2017, the picture of authentic FDI origin is attracting effective investment capital from Japan and Korea. This is the basis for the strategic orientation of attracting new generation FDI, with a proactive investment promotion plan that will attract potential investors into the priority areas identified as the focus. Looking for
new investors, of course Vietnam will still have to make efforts to attract, retain and engage with strategic investors.
On investor side, pledged to continue long-term investment and focus on sectors, clusters, strategies and priority areas of long-term that have significance impact and sustainable development with Vietnam’s economy,Mr. Maeda Shigeki, Vice Chairman of the Foreign Trade Promotion Agency (JETRO VN), in a recent exchange in 2018, shared that the Government of Japan has continued to promote the Abenomics policy, investing in international markets in which a key focus is Vietnam; in parallel continue to develop country to become one of the most favorable investment environment in the world.
JETRO’s survey also said that up to 70% of Japanese enterprises in Vietnam have the motto “Expanding operations” – a high rate compared to other countries. Japanese enterprises are also expected to continue to receive support from the Government of Vietnam, including efforts to improve the barriers and risks faced by FDI enterprises, such as increased labor costs. , incomplete legal system, unclear application, taxation and taxation procedures or complicated administrative procedures.
Mr. Masashi Mochizuki – Senior Director, in charge of Japanese Customer (Eximbank-EIB, reps from shareholder Sumitomo Mitsui Banking Corporation -SMBC), said through financing, investment and lending activities Japanese businesses are investing in the market, he noted that Vietnam is still a “first priority” market of many Japanese enterprises.
“Since the beginning of the strategic partnership in 2008, EIB and SMBC have started collaboration business for Japanese Investors in Vietnam. Major part of Japanese investment has been occupied with 100% FIE establishment, therefore, EIB has focused more to support such FIEs by local cash management products, such as payroll service, ATM and cash handling service, in the business field where local banks have advantages in comparison with foreign banks. At the same time, EIB has imported Japanese technology and know-how from SMBC to improve its service quality, and this strategy; “Local Service with Japanese Spirit” has been accepted and appreciated by many Japanese companies and individuals. Accordingly, both customers’ number and transaction volume keep on increasing, e.g. corporate banking business volume for Japanese customers increased by 65% in 2017 in compare with 2016”
Also from Mr. Mochizuki’s opinion, Japanese investment activities are expanding to varieties of business fields, and modes of investment started diversified, namely, cases of stock investment, capital injection and JV establishment are increasing. In this trend, EIB recently started a new service structure supporting Japanese investors for their administrative process of stock investment or capital injection to Vietnamese local companies. Because such investment modes are still new in the market, transaction process and administrative practice are not yet well-organized, and it makes Japanese investors confused and hesitate to make investment.
Share more with Enternews Newspaper, Mr. Yutaka Moriwaki – BOD Director, Senior Director and Head of Restructuring Project of Eximbank, came from beside the role of strategic shareholder accounted for 15% shares. SMBC has two branches in Vietnam namely Hanoi Branch and Ho Chi Minh City Branch, mainly engaged with corporate banking business, project & trade finance. In its strategy, besides management contributions and direct participation in restructuring Eximbank to protect the interests of clients, shareholders and the staff, while contributing to the support of Japanese customers and SMBC activities in Vietnam. The bank identified Vietnam as one of SMBC’s most important markets in its Asia development strategy
In addition to SMBC, in particular in the financial sector, large corporations such as Mizuho, a strategic partner of Vietcombank, also affirmed their long-term commitment to the Vietnamese market. An Economic Assessment: In the Abenomics strategy of Japan and the beginning of the third wave of investment in Vietnam, the Japanese have been able to “place” large industrial, manufacturing and manufacturing projects. And this is the period when Japan’s financial services, business support, small and medium will follow, making “satellite” support for the Japanese manufacturing network. Accordingly, he said that Japanese FDI has not “stepped back”, which in fact has transformed into a new era, deep-rooted and stronger in the market.