About 65% of Japan firms in VN gain operating profits

Workers manufacture electronic equipment at Mabuchi Motor Danang Ltd. 65.3 per cent of Japanese companies in Vietnam gained operating profits in 2018. — Photo baodanang.vn

Hironobu Kitagawa, chief representative of Japan Trade Promotion Organisation (JETRO)’s branch in Hanoi, relayed the information at a meeting with Deputy Minister of Industry and Trade Do Thang Hai in Hanoi on February 20.

According to the report, 2018 saw strong development of Japanese firms in both the manufacturing and non-manufacturing sectors.

JETRO representative said the number of Japanese firms that gained profits in the northern region was higher than in other regions.

In 2019, besides continuing investment in Hanoi and HCM City, Japanese businesses will expand their investments into other localities.

Kitagawa said 70 per cent of Japanese enterprises in Vietnam have expansion schemes, higher than the rate in other countries.

Vietnam continues to be an investment destination for Japanese enterprises because of increases in revenue and high growth potential, he said.

Kitagawa emphasised that the localisation rate of Vietnam has been increasing since 2010. In 2018, Vietnam’s localisation rate surpassed Malaysia’s for the first time. This is encouraging progress but the rate still needs to be improved because it is still not high in comparison with China, Thailand and Indonesia.

Kitagawa also pointed out the risks of the investment environment in Vietnam. These include rising labour costs, the incomplete legal system, complicated tax system, administrative procedures and high rate of employee retrenchment. He said that while four of these categories have been improved since 2017, the legal system has not.

Kitagawa said JETRO is expected to publicise its full 2018 survey on the business conditions of Japanese companies in 20 countries and regions in Asia and Oceania, including Vietnam, in Hanoi on March 4. It will be reported on the website of the Ministry of Industry and Trade.

At the meeting, Deputy Minister Hai said the Government and the Ministry of Industry and Trade have paid attention to the development of foreign enterprises in Vietnam, including Japanese businesses.

These business results are an important marker for the relationship between Vietnam and Japan, which has been developing well, Hai said. He added that the Government and the ministry will consult the report while formulating policies and perfecting the legal framework to encourage investment from foreign enterprises.