Foreign direct investment (FDI) from Japanese investors in Vietnam dropped 65 percent year on year, from the highest-ever rate of US$5.87 billion in 2013 to $2.05 billion last year, according to data released by the Japan External Trade Organization (JETRO).
The capital committed to newly registered projects decreased from $1.4 billion to $1.2 billion, a 14.3 percent year on year decline, said JETRO, which is a government-related organization that works to promote mutual trade and investment between Japan and the rest of the world.
Additional investment in existing projects plunged 81 percent, while the number of projects decreased about 15 percent year on year, from 352 to 298, the Japanese organization added.
A JETRO representative said the difficult economic situation in Japan, plus the depreciation of the Japanese yen, made major Japanese corporations and smaller companies restrict investments overseas, Vietnamese newswire VnExpress reported.
In 2015, the majority of Japan’s new FDI projects in Vietnam would probably be of small scales, he added.
Around 85 percent of Japanese projects in recent years have a size of less than $5 million, whereas smaller-scale projects worth under $1 million accounted for 61 percent, according to JETRO.
Among the Japanese FDI projects in Vietnam, the strongest decline was seen in the manufacturing sector. The number of new investment projects in this area went down from 161 to 108, of which the capital shrank from $1.1 billion to $828 million.
Only the construction and real estate sector saw an increase in investment capital last year. In particular, Japanese FDI into the sector increased from $23 million in 2013 to $155 million in 2014, up 6.7 times year on year.
Generally in 2014, South Korea continued to be the largest investor in terms of new investments and newly added capital, respectively accounting for 31 percent of the total projects and 36 percent of the total FDI investments in the Southeast Asian country.
In 2015, many new and existing Japanese investors will promote cooperation in the agricultural sector of Vietnam, a JETRO representative in Ho Chi Minh City told Tuoi Tre (Youth) newspaper on Monday.
Many Japanese businesses operating in agriculture have traveled to Vietnam to learn about the local sector and seek for partners, he said.
In February, the vice president of ISE Food Group with 120 years of history in the development of egg farms joined a meeting with representatives of the Ho Chi Minh City People's Committee and expressed his desire to search for partners in Vietnam to cooperate, introduce, and transfer egg production technologies.
Earlier, a Japanese business delegation visited the Mekong Delta to seek opportunities for making agro-produce – such as mango and rambutan – and aquatic products, like shrimp and fish, he added.