Japanese investors are doing well in Vietnam with 64 percent of them planning business expansion, the highest rate of all Asia-Pacific markets.
A new survey by the Japan External Trade Organization (JETRO) showed that many Japanese investors are favoring Vietnam given its low labor costs and high growth potential brought by the Trans-Pacific Partnership. Vietnam and Japan are among 12 members of the free trade pact.
The survey found 85 percent of Japanese businesses in Vietnam posted higher revenues in 2015.
Responses were collected from 4,635 Japanese businesses in the region, including 557 in Vietnam.
The Philippines came second in the survey with 55 percent of respondents planning for expansion, followed by Indonesia with 52 percent. The ratio in Thailand was 49 percent, Malaysia 44.6 percent and China 38 percent.
Yasuzumi Hirotaka, representative of JETRO in Ho Chi Minh City, said at a conference that the labor costs in Vietnam’s manufacturing sector are less than half of those in China, Thailand and Malaysia.
But he said investors have problems sourcing raw materials in Vietnam as the country has only managed to supply 32 percent of the materials needed for production, lower than other markets.
Many investors also said Vietnam can be a risky investment destination due to a lack of transparency in its incomplete legal system.
Japan’s direct investment in Vietnam reached US$1.84 billion in 2015, only after South Korea and Malaysia. Most of the projects were in the manufacturing, retail and IT sectors.