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New wave of investment from Japan

Date: 6/25/2012 7:38:50 AM

Vietnam remains a safe destination in the eyes of Japanese investors as the Vietnamese economy continues to grow and integrate into the regional and global economies. Despite a decline in Foreign Direct Investment (FDI) in Vietnam, Japanese businesses have continued to increase their investment into Vietnam, especially since mid 2011.

According to the Ministry of Planning and Investment, up to the end of 2008, Japan has invested in Vietnam more than US$17 billion and by the end of 2011 that increased to nearly US$24 billion. In the first four months of 2012, Japan took the lead among countries and territories having newly licensed investment projects in Vietnam with over US$2.36 billion, accounting for 76 percent of the total amount of FDI registered in Vietnam in that period. Japanese FDI in Vietnam is predicted to continue to grow because it matches with the Vietnamese Government’s orientation for FDI attraction. Vietnamese people and government officials at different levels highly appreciate Japanese FDI. Japanese investors are considered as the most serious foreign investors in Vietnam. They have high technology and strong financial capacity.

After an investment promotion trip to Japan in April 2012, Dong Nai Province People’s Committee Chairman Dinh Quoc Thai said that there are many reasons encouraging Japan to increase investment in Vietnam. Firstly, after the earthquake and tsunami in March 2011, the Japanese Government has encouraged small and medium-sized domestic businesses to boost overseas investment. Secondly, businesses of the two countries share many similarities in terms of capital and therefore they can easily promote cooperation. In addition, Vietnam and Japan have agreed to boost bilateral trade based on the VND/JPY exchange rate but not any other foreign currency, so Japanese investors do not have to worry about the depreciation of their currency. The potential of Japanese investment in Vietnam and Dong Nai Province in particular is very big.

Nowadays, Japanese investors want to build their trading facilities, including retail shops and big supermarkets, with the aim to bring products made in Japan or other countries to Vietnam. A series of Japanese self-service shops in Vietnam such as Family Mart, MiniStop and Aeon are increasing their presence in the country by opening more shops in Ho Chi Minh City. Apart from these retailers, a leading retail group of Japan, Takashimaya, is looking towards the Vietnamese market and it will be accompanied by world famous fashion brands.

Along with expanding the sales and distribution network, investing in the real estate market has been another option of Japanese investors in Vietnam in the recent period. The Tokyu Corporation of Japan, in cooperation with the Becamex IDC Corporation of Vietnam, began work on a US$1.2 billion property project covering 71ha in Binh Duong Province in early March 2012. This project consists of entertainment facilities, trade centers, office and apartment buildings with about 7,500 housing units.

In the field of industrial real estate, some Japanese industrial park (IP) infrastructure developers have entered the Vietnamese market. Recently, two Japanese investors, Mizuho Bank and Chodai Corporation, came to Vietnam to discuss the second stage of the infrastructure development project for the Hiep Phuoc IP in Nha Be District, Ho Chi Minh City. They are working with the Hiep Phuoc IP Infrastructure Development Company to develop a specific IP for Japanese companies in Ho Chi Minh City. This project comes in line with the city’s development orientation, under which a specialized IP will be established to attract Japanese investment in the field of support industries.

In Dong Nai Province, in February 2012, the Long Duc Investment Company Limited, a joint venture between three Japanese companies, Sojitz Corporation, Daiwa House Industry, Kobelco Eco-Solution, and Donafood (Vietnam), broke the ground to start construction of the infrastructure for the 282.8ha Long Duc IP in Long Thanh District. With total investment of more than VND1.08 trillion, construction of this IP is projected to finish in August 2013. Jesco Holding, a Japanese specialist in the field of technology and infrastructure construction investment, has decided to contribute its capital to the Hoa Binh Infrastructure Investment and Construction Joint Stock Company (HBI) - the infrastructure investor of the Long Hau 4 IP in Long An Province. Jesco will provide HBI with consultancy for IP development and help it attract Japanese investment.

Some Mergers and Acquisitions (M&A) affairs in the field of consumer goods, for example Kirin Holding bought acquired 50 percent of the stocks at the International Food Joint Stock Company (Interfood); Daio Paper bought the stocks of the Saigon Paper Company; the Ezaki Glico Co., Ltd., a specialized confectionary and food business of Japan, owns about 10 percent of the chartered capital of the Kinh Do Corporation. Japanese businesses have found favorable conditions to invest in Vietnam as Vietnamese companies are coping with lots of difficulties; the interest rate in Vietnam is higher than in Japan; the shares of Vietnamese companies are currently sold at very low prices.

Reality shows that Japanese businesses are expanding their operations into many new fields in Vietnam. They consider Vietnam as an ideal investment destination. It is believed that in the new future, Vietnam will welcome a new wave of investment from Japan.

(Source:VEN)

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