According to a survey released by the Japan External Trade Organisation (JETRO) in May 2024, Vietnam is emerging as a significant destination for Japanese companies looking to expand their overseas business.
Popularity of Vietnam Among Japanese Companies
The survey revealed that 24.9% of respondents planned to expand their business in Vietnam, making it the second most popular destination after the United States.
Among large groups, 28.6% planned to expand into Vietnam, trailing closely behind India at 29.5%. Additionally, 24.1% of Japanese small- and medium-sized enterprises also have plans to enter the Vietnamese market.
The primary reason cited by 76.9% of respondents for selecting Vietnam was its “market size and growth potential.” Other significant factors included having existing offices in the country (31.6%) and the availability of a low-cost, abundant labor force (27.6%).
Takeo Nakajima, chief representative of JETRO in Hanoi, highlighted the dramatic expansion of Japanese investment in Vietnam. In 2003, Japanese investment totaled $4 billion, accounting for just 9% of Vietnam’s total foreign investment.
By 2023, this figure had grown to $75 billion, representing a 16% share. Currently, Japan ranks third in investment amount ($76 billion) and second in the number of projects (5,369) in Vietnam.
The two countries are also strong partners in official development assistance, trade volume, and people-to-people exchanges.
As of June 2024, data from the Ministry of Planning and Investment showed that Japanese companies had invested $76 billion in Vietnam, making Japan one of the leading foreign investors in the country, alongside South Korea and Singapore.
The Vietnam-Japan Joint Initiative, which began in 2003, has completed eight phases and has significantly contributed to the 20-fold increase in Japanese investment in Vietnam.
Major Foreign Investors in Vietnam
Vaibhav Saxena, foreign counsel at Vilaf, emphasized the importance of southern region policies implemented by governments in supporting business expansion.
He noted that these policies help diversify supply chains and reduce reliance on specific countries, making Vietnam an attractive destination for East Asian investors due to its dynamic economy and favorable investment climate.
In recent years, Japan, South Korea, mainland China, Hong Kong, and Taiwan have been the biggest foreign investors in Vietnam. In 2023, Japanese investors poured nearly $6.57 billion into the country, accounting for more than 17.9% of total capital and rising 37.3% year-on-year, placing Japan second among foreign investors.
This growth continued in the first quarter of 2024, with Japan remaining one of the top five foreign investors in Vietnam.
As Vietnam continues to attract significant foreign investment, its strategic partnerships and favorable business environment are likely to bolster its economic growth and development further.