The survey found 58 percent of Japanese enterprises want to expand their business in Vietnam, which is a positive sign for both countries in the context of the global economic turmoil.

The results of the survey were released at a workshop on the Vietnamese economy held by JETRO in Tokyo late last month.

Japanese businesses operating in six ASEAN countries-Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam as well as India were polled.

Vietnam topped the list with 38.8 percent of companies naming it the best investment destination, followed by the Philippines with 26.1 percent, Thailand with 21.6 percent and Singapore with 20.2 percent.

Vietnam had the highest percentage of firms that were expanding production and transferring technology from other countries.

Many Japanese businesses preferred Vietnam to other ASEAN member countries due to its social and political stability (64.5 percent), its market potential (47.8 percent) and low labour costs (37.7 percent), the survey found.

The survey also pointed out some of barriers faced by Japanese companies in Vietnam, including complicated administrative procedures (67.2 percent), incomplete infrastructure (66.4 percent) and inconsistent implementation of policies (49.6 percent).

Other weaknesses in Vietnam’s manufacturing sector and consumer market were pointed out by Hirota Nakanishi, a foreign investment consultant for JETRO in HCM City.

He said the first problem was the lack of a support industry in the country, necessitating the import of most accessories from other countries, increasing production costs and therefore product prices.

The distance between the two major economic hubs of Hanoi and HCM City and poor traffic infrastructure were other problems faced by Japanese businesses, Nakanishi said.

Nakanishi suggested that Japanese businesses place their focus on particular customers in particular locations.

He also advised Japanese investors that they learn more about the tastes of Vietnamese customers, which can change during different seasons of the year.

Japanese companies should care fully select local business partners with great potential for co-operation in doing business.

For his part, Hirano urged Japanese businesses to expand sales to the countryside. He said this would be better than trying to reach out to Vietnamese customers through supermarkets.