Two Thirds of Japanese Firms in Vietnam Plans Expansion: JETRO

A report recently launched by JETRO shows that Japanese companies recorded better performance in 2016.


                                  An assembly line of Honda Vietnam. Photo: baodautu.vn

Up to 66.6% of Japanese companies in Vietnam plan to expand their operations in the Southeast Asian country, Atsusuke Kawada, chief representative of the Hanoi office of the Japan External Trade Organization (JETRO), has said.

“This indicates that Japanese firms consider Vietnam a potential and remarkably attractive market,” he said at a press conference on the launch of a JETRO survey conducted at the end of 2016.

                                                                  Source: JETRO.

As many as 87.7% of the respondents ascribed their expansion intention to “increase in revenue” while 46% of them were upbeat about high growth potential.

Nearly 63% of the Japanese companies in Vietnam said they made a profit in 2016, four percentage points higher than in 2015, while 25.1% reported losses, down 1.1 percentage points from a year earlier.

                                                                         Source: JETRO.

The respondents also pointed out that the Vietnamese business environment has improved considerably over the past year.

Nearly two thirds of them see Vietnam’s socio-politic situation stable, and more than a half are optimistic about Vietnam’s market size and low labor cost, according to the report.

However, when it comes to risks in the investment environment, 58.5% of the respondents said the labor cost was increasing, while 44% considered incomplete infrastructure and complicated taxation procedure risks.

Although the localization rate for Japanese companies in Vietnam increased by 2.1 percentage points year-on-year to 34.2% in 2016, the local input is considered low in comparison to China (67.8%), Thailand (57.1%) and Indonesia (40.5%).

Up to 47.2% of Japanese firms in Vietnam, up 2.2 percentage points from the previous year, said they applied Free Trade Agreements (FTAs) and Economic Partnership Agreement (EPAs) after the pacts came into effect.

Tuan Minh / BizLIVE