Japanese businesses eye Vietnam as attractive investment destination

The Japan Bank for International Cooperation (JBIC) revealed in a recently conducted survey that Vietnam ranked second among the most attractive and promising foreign investment destinations for Japanese companies.

Currently, the Japanese economy is facing difficulties and challenges, forcing its businesses to look abroad with plans to expand markets, increase investment capital, and develop production facilities. In this context, Vietnam, with many advantages, continues to be considered an attractive investment destination and a ‘strategic’ choice for most Japanese companies.

Over the past three years, Vietnam has consistently risen in the rankings in surveys conducted by JBIC. It advanced from fifth place a few years ago to fourth place in 2022, and has maintained its second position since 2023.

According to Japanese economists, politicians, managers, and entrepreneurs, Vietnam has many factors that attract businesses, not only from Japan but also from many other countries.

“The first factor lies in the country’s enormous development potential. We gradually realized the attractiveness more than 10 years ago when we began investing in Vietnam,” shares Imano Hiroshi, vice chairman of THK, a leading Japanese company that manufactures precision mechanical components.

“Notably in recent years, many businesses from China, the Republic of Korea and Japan have made significant investments in Hanoi. In terms of development potential, Vietnam has a much larger advantage than other countries in the region. That’s why we have decided to continue our investment in the country,” states Hiroshi.

Since 2022, Vietnam has consistently ranked second, behind the United States, on the list of attractive destinations for Japanese companies, according to the Japan External Trade Organization (JETRO). When rating Vietnam, Japanese businesses and officials highly appreciate the quality of the country’s human resources and believe that Vietnam is an ideal destination for relocating production facilities from abroad.

Hoshino Mitsuaki, director general of the Bureau of Economy, Trade, and Industry for the Kyushu region under Japan’s Ministry of Economy, Trade, and Industry, points out that currently, Vietnam has a rich, trained workforce, especially a team of highly skilled engineers who can meet all job requirements. From this perspective, the two countries can complement each other.

“In my opinion, the two countries should start promoting cooperation, beginning with training and utilizing each side’s high-quality human resources,” suggests the official.

Economic experts also analyze that, while Vietnam’s previous advantage was its abundant, low-cost labour, today the increasing capabilities of its workforce have become a ‘formidable’ competitive advantage for the country in comparison to other investment destinations. However, some believe that Vietnam and Japan need to continue working together to address some existing issues in order to elevate bilateral cooperation to new heights.

Japanese lawmaker Aoyagi Yoichiro proposes that the two sides continue further improving the investment environment.

“In fact, Japanese companies still face some difficulties with administrative procedures when investing in Vietnam. Meanwhile, Vietnamese businesses also encounter similar challenges in Japan,” he points outsays.

“This is an issue that the parliaments and governments of both countries should collaborate to resolve. Last year, despite such difficulties, a Vietnamese company was listed on the Japanese stock exchanges. Such an effort is commendable and proves that if we work together, we can solve these issues.”

Japanese economists, politicians, lawmakers, managers, and entrepreneurs also agree that Vietnam’s selective investment attraction policies are proving effective. Together with its favourable geographical location and rich supply of high-quality human resources, Vietnam will continue to attract many investors, not only from Japan but from other countries in the region and worldwide, making a significant contribution to the country’s economic growth in the near future.