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25% of Japanese firms relocate to Vietnam after China exit: JETRO

Saturday, November 21, 2015, 15:37 GMT+7
25% of Japanese firms relocate to Vietnam after China exit: JETRO
Employees work at a Vietnam-Japan textile firm in this file photo.

One out of four Japanese businesses that left China would head for Vietnam, a trade official revealed on Friday.

As many as 25 percent of Japanese firms have relocated their operations to Vietnam after the China exit, Yasuzumi Hirotaka, head of the Ho Chi Minh City branch of the Japan External Trade Organization (JETRO), said at a meeting in the southern city of Can Tho.

The regular event was held by the Can Tho branch of the Vietnam Chamber of Commerce and Industry (VCCI) to review investment activities Vietnam’s Mekong Delta.

Japanese investors are attracted by the cheap labor costs and the much improved infrastructure in the Southeast Asian country, Hirotaka elaborated.

Many new bridges and roads have been built in Vietnam, cutting travel times between localities, so Japanese businesses want to expand investment to other areas rather than just Ho Chi Minh City, he added.

Still, businesses from the East Asian country are still concerned as investment information remains mostly unclear, while labor costs have also begun rising, the JETRO official noted.

The weak supporting industries of Vietnam is also an issue, as a business could only domestically source 33 percent of the necessary materials for production, while having to import the remaining proportion.

Vietnam thus needs more support in terms of taxes and other incentives to improve the supporting industries.

A representative of the South Korean trade organization also told the meeting that its member businesses do not know much about the agriculture sector in Vietnam’s Mekong Delta.

Mekong Delta provinces are therefore urged to supply more information and introduce their strengths to foreign businesses to be able to attract more investors, the South Korean trade organization advised.

Besides Can Tho, which is directly administered by the central government, the Mekong Delta also includes such provinces as Long An, Tien Giang, Ben Tre, Vinh Long, Tra Vinh, Hau Giang, Soc Trang, Dong Thap, An Giang, Kien Giang, Bac Lieu and Ca Mau.

These 13 localities took advantage of the Friday meeting to inform international investors that they are calling investment for 74 projects.

Japanese businesses will boost investment to the Mekong Delta, and seafood emerges as the industry with the biggest potential, according to the Japanese trade representative.

Vietnam’s Mekong Delta attracted $2.3 billion worth of foreign investment between 2011 and 2014, according to the VCCI Can Tho.

The area posted an average economic growth of 10 percent annually from 2001 to 2010, and 8.8 percent a year in the 2011-14 period.

There are now 29,000 businesses operating in the Mekong Delta, accounting for 7.7 percent of the total number of firms across Vietnam.

Considered Vietnam’s granary, the Mekong Delta supplies more than 90 percent of the country’s rice production, and 50 percent of the seafood outputs, among many other agriculture produce, according to the VCCI Can Tho.

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