Facing the uncertainty of investing in the Chinese market, Japanese firms have gradually withdrawn their capital from that market and invested in Southeast Asian countries instead. And Vietnam is one of those trusted destinations.
A series of newly licensed projects
The attention of Japanese enterprises to the Vietnam market is growing steadily as a series of Japanese firms have been coming to the country to study infrastructure and management policies to prepare for investment.
Besides a series of businesses from Japan External Trade Organisation (JETRO) have been researching Vietnam market, some big Japanese corporations such as Sojitz, IHI, Itochu also had meetings with the leadership of the Ministry of Planning and Investment to learn and discuss investment and business plans in Vietnam. In early 2013, IHI Corporation decided to establish a factory producing steel structure, concrete and machinery at Dinh Vu Industrial Zone (Hai Phong) with a total investment of nearly US$48 million. Meanwhile, Itochu and Sojitz are also not strange names when those two corporations have invested in many projects in Vietnam.
According to statistics, Sojitz has invested more than 20 factories in Vietnam, varied in areas and spreading across the country, they are also planning the construction of a pulp mill with US$180 million value in Quang Ngai. The project is a partnership between Sojitz and JK Corporation of India.
Earlier, Sojitz invested to build two industrial parks Long Duc and Binh Long and achieved extremely positive results, attracting a large amount of FDI from Japan investors. Most recently, Sojitz has decided to expand their investment to Phu My Industrial Zone 3 (Ba Ria - Vung Tau). According to representatives of Sojitz Corporation, currently those plans were being developed smoothly and as soon as the project complete, the corporation would continue to expand this model to other localities. Reportedly, Phu My Industrial Zone 3 is a key project approved by the Prime Minister to be a Vietnam - Japan intensive industrial zone with an area of 1,000 hectares. This is one of the industrial zone projects which have many geographical advantages such as the connection to the deepwater port of Cai Mep - Thi Vai, and the location near Highway 51 and highway Bien Hoa - Vung Tau.
Sojitz's success after steering investment into Vietnam market will be the basis to attract other Japanese firms to invest in production facilities in Vietnam.
In the dialogue between the Ministry of Planning and Investment and the Japan Bank for International Cooperation (JBIC) recently took place in Hanoi, Mr Hiroshi Wantanabe, CEO of JBIC, said that Japanese investors were very interested in the Vietnam market, as evidenced by the constant increase of capital investment from Japan to Vietnam recently. Of that public - private partnership (PPP) investment would be an important source to attract capital from the Japanese side.
BOT investment (one of the forms of investment governed by the Decree on PPP which is currently drafted by the Ministry of Planning and Investment and will be submitted to the Government in the near future) also receives a lot of interest from Japanese investors, especially for projects relating to infrastructure. “Japanese investors are keen to three BOT projects which are BOT Nghi Son II with a capacity of 1,200 MW, BOT Vung Ang II with a capacity of 1,200 MW and BOT Van Phong I with capacity of 1,320 MW. These projects are currently under negotiation of a BOT contract with the Ministry of Industry and Trade, especially Japanese investors who have advantages in this field such as Marubeni, Sumitomo and Mitsubishi, and are eager to accelerate the implementation of these projects,” said Mr Watanabe.
More transparent mechanism for investors
According to Mr Le Van Tang, Director of Procurement Management Agency (Ministry of Planning and Investment), BOT projects would not have any problems relating to implementation. To maintain investors’ confidence, the Ministry of Planning and Investment confirmed that during the transition period, old projects would continue applying old BOT provisions as before. After the issue of PPP decree, investors would have the option to apply the rules or not. When drafting the PPP, the Drafting Committee consistently followed the principles and directions of Minister of Planning and Investment Bui Quang Vinh, which is standing in the position of investors to be more understanding. “Our immediate and long-term objective remains attracting foreign investors. Thus, the legislation should create the biggest advantages for investors,” said Mr Tang.
Mr Do Nhat Hoang, Director of Foreign Investment Agency (FIA), said that Vietnam was working to improve investment and business environment to create the most favourable conditions for foreign investors, and Japanese investors in particular, to attract them to come investing and doing business in Vietnam.
Besides, infrastructure investors in industrial parks were willing to create favourable conditions for Japanese investors. In the previous period, industrial parks required investors to get a lease contract of thousands of m2 to be accepted, but now, based on the demands of businesses, they were willing to accept leases of only 500m2. Many industrial parks lowered rents from US$60 /m2 to US$40 /m2.
Mechanisms for foreign investors were getting more open and transparent; besides, support and flexibility in project implementation were also more professional, opening up a huge opportunity for Vietnam in attracting foreign investors. As predicted by many economists, with available advantages, the wave of Japanese FDI would continue to roll into Vietnam in the coming time.
Vietnamese
