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Vietnam woos Japanese investments
Publication Date : 06-09-2013
Improving the investment climate was vital if Vietnam wants to attract more investments from Japan, experts said at the Vietnam–Japan Economic Summit 2013 on Thursday.
The three-day event held by the Vietnam Chamber of Commerce and Industry, Japan External Trade Organisation (Jetro) and Nikkei Business Publications, aimed to work out measures to enhance the economic co-operation between the two countries.
"The Japanese and Vietnamese economies are meant to complement each other. Vietnam is not only a long-term investment destination for Japanese businesses but also a trusted friend and companion," said To Huy Rua, Politburo Member and President of the Vietnam–Japan Friendship Parliamentarians Caucus.
According to the Minister of Planning and Investment, Bui Quang Vinh, the investment climate in Vietnam is not that attractive to Japanese investors as there are many shortcomings that need to be overcome.
"Vietnam is not the only option for Japanese investors. So, improving the investment climate is urgent and essential," he said, adding that "or else, Vietnam will lose investments from Japan to other countries, like Thailand, Laos or Cambodia."
Vinh added that improving infrastructure and the quality of human resources was vital.
Motonobu Sato, Chairman of the Japan Business Association in Vietnam, said that polices in Vietnam changed so often and lacked coordination among government agencies.
"This makes Japanese investors lose confidence," he said.
He urged the government of Vietnam to hasten thorough reforms, which he called the "second reform" of Vietnam – and provide a detailed road map.
According to Japanese Ambassador Yasuaki Tanizaki, Vietnam was at the point that investments from Japan could increase or decrease, depending on the country's reform performance and improvements in the investment climate.
Still, he said that he was optimistic that Japan's investments into Vietnam would see strong growth in the future.
Jetro's vice president Daisuke Hiratsuka said that Japanese enterprises were showing growing interest in Vietnam. He said that more than 6,800 investors visited Jetro's office in Vietnam last year, making it the second busiest among Jetro's overseas offices.
Vietnam has huge demand for infrastructure development, but the state budget has its limitations. Statistics showed that the usable capital for infrastructure stayed at only US$8 billion per year while the demand was up to $40 billion.
Le Van Tang, Director of the Public Procurement Agency, said there was an urgent need for Vietnam to develop infrastructure as it ranked only 90th among 142 countries in the World Business Forum's global competitiveness report for 2011.
He reiterated calls for private sector participation in developing infrastructure.
As the biggest foreign investor in Vietnam, Japan plays a role in financing for Vietnam's infrastructure development.
However, according to a representative from the Bank of Tokyo-Mitsubishi, clear government support and a proper legal framework were necessary to encourage investment.
Focusing on support industries, a survey by Jetro found Japanese-affiliated companies faced difficulty in procuring materials or parts in Vietnam.
According to minister Vinh, Vietnam needs to have a comprehensive and long-term industrialisation strategy for support industry together with a master plan.
Vinh said a lesson learned from past failures in developing the automobile industry in Vietnam is that the government's policies must be in line with development strategy.
Vietnam had a strategy to develop the car industry, but tax was too high, sometimes as high as 100 per cent, he added.
He said Vietnam should enhance technology transfer, especially from countries with developed technology like Japan, so that it could develop support industry.
At present, Japan is the top FDI player in Vietnam and also the biggest donor to Viet Nam in Official Development Assistance.
More than 70 per cent of Japanese ODA is used for infrastructure projects such as transport and power plants.