Opaque regulations stymie Japanese businesses in Vietnam

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Vietnamese workers at a Japanese component factory in the Tan Thuan Export Processing Zone in Ho Chi Minh City's District 7

Japanese firms find it hard to expand their operations in Vietnam due to shortcomings in investment and administrative procedures, the country's envoy has said.

Ambassador Yasuaki Tanizaki, speaking at the 2013 Vietnam Japan Economic Summit in Hanoi on Sep. 5, said the problems that Japanese companies face in Vietnam are poor infrastructure, unstable power supply, lack of managerial talent, and lack of transparency in investment procedures and regulations.

"If Vietnam does not improve its regulations, it will be very hard to attract Japanese investment," he warned.

The chairman of the Japanese Business Association in Vietnam, Motonobu Sato, said Japanese firms have experienced difficulties in getting investment licenses and incentives in Vietnam.

Japanese companies want to invest in Vietnam but the country should have a clear vision about how it is going to develop the economy, he said.

The government should have a transparent reform agenda and a specific timeline for it.

Speaking at the forum, Minister of Planning and Investment Bui Quang Vinh admitted to all the shortcomings and said it is time Vietnam looked into its weaknesses to improve itself.

Vietnam has to compete with other countries in the region to attract investors, he said, pledging to improve the business environment by putting in place coherent business laws and developing human resources and the infrastructure.

He reminded Japan about technology transfer. Only 5 percent of Japanese firms in Vietnam have fulfilled their commitment to transfer technology to their Vietnamese partners and Japan should do something to speed up the process, he said.

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Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry, said Vietnamese companies want Japanese companies to invest more in research and development in Vietnam and seek a place in their global supply and production chains.

"Big investors from South Korean such as Samsung and LG have set up research centers in Vietnam and transferred technology to help develop the country's supporting industry and we hope Japan will do the same," he said.

Japan is the biggest provider of aid to Vietnam, having given US$24 billion in official development assistance loans in the 40 years since the two established ties. It accounts for 30 percent of total ODA to Vietnam.

Japan has also invested more than $32.6 billion in 1,990 projects, and is Vietnam's third biggest trading partner with two-way trade of $24.7 billion last year.

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