Japanese media: Building a new Japan-Vietnam era through private investment

The Japanese economic news site jbpress.ismedia.jp recently run an article by scholar Hiroyuki Kawashima calling on the Far East country to increase private investment in the Vietnamese market, or otherwise it will be left behind and become the "old benefactor" of the country.

According to details set out in the article, during the 2015 to 2019 period, Japan provided the nation with roughly US$5.7 billion in aid, duly accounting for 40% of the country’s total ODA capital.

Most notably, Japanese ODA has helped the Vietnamese side to build new facilities at Noi Bai airport and Nhat Tan bridge, both of which serve as symbols of the good relationship between Vietnam and Japan.

Japanese investment in the Vietnamese market over five years from 2017 to 2021 stands at US$22.4 billion.

Although Japanese ODA accounts for 40% of the country’s total ODA, the East Asian nation’s FDI investment makes up only about 20%.

Kawashima outlined that Japan has supported the Vietnamese side in terms of infrastructure development, but has not yet had commensurate investment, while many other countries have taken advantage of this infrastructure to increase their own investment.

Japanese scholars also assessed that the Far East country has been supporting Vietnamese economic growth through ODA for a long time. However, in order to maintain positive relations between Japan and Vietnam in the future, investment from the private sector will become increasingly important.

The article stated that Vietnamese GDP per capita stood at more than US$4,000, showing that the country boasts the potential to become a middle-income economy.

Ongoing trade tensions between the United States and China are continuing to accelerate the trend of shifting production out of China, with Vietnam representing an attractive destination for foreign investors.

In line with this, the country boasts a low average age and a growing group of middle-income people. This not only creates a young workforce, but also leads to an increase in terms of the number of consumers interested in high-quality Japanese products.

The country boasts a geographical advantage in Southeast Asia, with a system of deep-water seaports facing the East Sea, a system of roads, and increasingly complete infrastructure.

Furthermore, the nation is a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP).

According to details noted in the article, Japan is striving to build a new relationship with the Vietnamese side, in which private investment can be considered as an act to create a further breakthrough in terms of mutual relations.

Japan is currently the country’s leading economic partner, the largest ODA donor, its the second largest labour co-operation partner, its third largest investment and tourism partner, as well as the nation’s fourth largest trade partner.

Japanese FDI inflows were present in 57 out of 63 provinces and cities across the country.

Accumulated to December, 2022, Japan boasts 4,978 valid FDI projects in Vietnam with a total registered investment capital standing at more than US$68.89 billion, ranking third among 141 countries and territories investing in the nation.

According to results of a survey conducted by the Japan Trade Promotion Organization published in February, up to 60% of Japanese enterprises participating in the survey said that they would expand their business activities in the Vietnamese market within the next one to two years. This rate therefore ranks first among ASEAN member states.