In the realm of Southeast Asian nations, 56.7% of Japanese companies are eyeing Vietnam for future business expansion within the next 1-2 years, placing it just behind Laos in terms of regional growth interest.
Vietnam, which had previously held the top spot in the ranking for two consecutive years, now sees a 3.3 percentage point decrease to 56.7%, according to a survey on the overseas investment status of Japanese firms in the fiscal year 2023. The survey results were unveiled on Friday by the Japan Trade Promotion Organization (JETRO) in Vietnam.
JETRO’s 2023 survey reveals that, among all the Asia-Pacific markets considered, the proportion of Japanese companies planning business expansion in Vietnam trails behind that of India and Bangladesh.
Breaking down the sectors, 47.1% of surveyed Japanese manufacturing firms express the desire to expand operations in Vietnam, while the corresponding figures for non-manufacturing companies and retailers are 65.5% and 100%, respectively.
Nobuyuki Matsumoto, Chief Representative of JETRO in Ho Chi Minh City, notes, “More Japanese businesses are investing to expand and dominate the Vietnamese market. Information technology businesses are showing an increased tendency to invest.”
Japanese businesses recognize Vietnam as an attractive and burgeoning market for the future, citing stable socio-political conditions and cost-effective labor as key strengths.
Nonetheless, challenges persist in the form of intricate administrative procedures, rising labor costs, and an imperfect legal system lacking transparency, Matsumoto acknowledges.
The survey indicates that the rate of Japanese firms expecting profits from their ventures in Vietnam in 2023 stands at 54.3%, marking a 6.6 percentage point decrease compared to the Southeast Asian average.