Time right for Vietnam to woo Japan: economist

Photo: AFP

A Japanese economist who advises the Vietnamese Ministry of Planning and Investment has said Vietnam should take advantage of the current economic and political situation to boost exports to Japan and attract Japanese investment.

With the yen’s relentless rise taking it to a 15-year high against the dollar last month, Vietnam’s exports to Japan are cheaper while Japanese investors are doing business more aggressively overseas, Kyoshiro Ichikawa told Tuoi Tre in an exclusive interview.

The recent territorial tension between China and Japan will surely make Japanese investors think twice about pouring more money in China and they are likely to partially or wholly relocate their investments and production facilities to Vietnam, he said.

The yen is likely to rise further in the short term since US economic recovery is slower than expected, he said.

But he allayed the fears that the appreciating yen will mean Vietnam’s official development assistance debt to Japan will rise since the appreciation is a short-term phenomenon.

Japan ODA commitments to Vietnam are worth over 1.394 trillion yen.

It used to be the equivalent of $14 billion but has risen to nearly $16.3 billion. In terms of the depreciating dong, it has risen from VND251 trillion to VND304.5 trillion.

Projects funded by ODA loans and yen-denominated commercial loans will be affected adversely by the currency appreciation, the ministry had said earlier.

Japan is one of Vietnam’s largest trading partners.

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Time right for Vietnam to woo Japan: economist

Photo: Tuoi Tre

A Japanese economist who advises the Vietnamese Ministry of Planning and Investment has said Vietnam should take advantage of the current economic and political situation to boost exports to Japan and attract Japanese investment.

With the yen’s relentless rise taking it to a 15-year high against the dollar last month, Vietnam’s exports to Japan are cheaper while Japanese investors are doing business more aggressively overseas, Kyoshiro Ichikawa told Tuoi Tre in an exclusive interview.

The recent territorial tension between China and Japan will surely make Japanese investors think twice about pouring more money in China and they are likely to partially or wholly relocate their investments and production facilities to Vietnam, he said.

The yen is likely to rise further in the short term since US economic recovery is slower than expected, he said.

But he allayed the fears that the appreciating yen will mean Vietnam’s official development assistance debt to Japan will rise since the appreciation is a short-term phenomenon.

Japan ODA commitments to Vietnam are worth over 1.394 trillion yen.

It used to be the equivalent of $14 billion but has risen to nearly $16.3 billion. In terms of the depreciating dong, it has risen from VND251 trillion to VND304.5 trillion.

Projects funded by ODA loans and yen-denominated commercial loans will be affected adversely by the currency appreciation, the ministry had said earlier.

Japan is one of Vietnam’s largest trading partners.

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Japanese want clear, fair retail rules

Japanese investors eager to break into the Vietnamese market have called for a reform of the country’s procedures for licensing foreign retail outlets.

Any firm wishing to open more than two retail outlets in Vietnam must apply for a license and meet a WTO criterion known as the Economic Needs Test (ENT). The ENT is a criterion that each member state may establish to prevent market overkill in the retail sectors.

But it is not clear which agency administers the test and what calculations it uses to grant permission.

Last week, members of the Japanese Business Association of Ho Chi Minh City asked local officials to issue the ENT guidelines so they would know what conditions they had to meet to develop their businesses here.

Representatives from the Japanese firms said they were interested in the Vietnamese retail market, which was fully opened to foreign investors early last year, but they were hesitant to implement their projects because they were not sure what they needed to do to pass the ENT test.

The Japanese businesses also claimed that some foreign retailers, like Korean Lotte Mart, Malaysian Parkson and German Metro Cash & Carry were allowed to open more than two outlets in the country without passing the ENT test.

Local governments licensed the outlets with support from the Ministry of Industry and Trade, they noted.

Hirota Nakanishi, senior investment advisor at the Japan External Trade Organization’s office in HCMC, said that retail outlets and convenience stores would thrive in Vietnam, if prerequisite regulations were clear to foreign investors.

Nakanishi added that the government should not only issue the ENT guidelines soon, it should also simplify licensing procedures.

These procedures have been complicated by local governments who have begun granting licenses without following any uniform guidelines, he said.

Lu Thanh Phong, deputy director of HCMC’s Planning and Investment Department, responded to Nakanishi’s claims by saying that some foreign retailers like Lotte Mart were licensed before Vietnam joined the WTO in 2007.

About 216 licenses have been granted to foreign investors to import, export and trade in the country since then, he added.

Other concerns

Shimasaki Ryuhei, deputy chairman of the association, said Japanese investors are also concerned about issues like traffic and taxi services in Vietnam that could dampen investor interest.

Upon arriving at the international airport in HCMC he said, most prospective investors run immediately into rude and fraudulent taxi drivers who demand unreasonably high fares and refuse to serve them at night.

Ryuhei said Japanese investors are also worried about illegal strikes that might affect their investments in the country. He asked what measures the local government was taking to rectify the situation.

Le Thanh Tam, director of HCMC’s Labor, War Invalids and Social Affairs Department, said no court had yet issued a ruling on the legality of strikes in Vietnam.

He said the country has seen more strikes occur in foreign firms than their local counterparts.

Moreover, Tam said the number of strikes shrank from 200 in 2008 to 70 last year in HCMC.

None of these involved Japanese businesses, he added.

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Mekong province promotes foreign investment

Photo: Tuoi Tre

Long An province in the key southern economic zone presented a list of its advantages and made offers to Japanese businesses at a meeting with the Outward mission Monday.

Pham Van Ranh, Vice Chairman of the provincial People’s Committee, said like other parts of the country, Long An has emerged as a destination for foreign investors, citing advantages of political stability, steady economic growth and an industrious workforce.

“The province has a good land reserve for industrial and urban development and infrastructure construction,” Ranh said.

Long An authorities confirmed that labour strikes in foreign companies did not make any impact on the province. They also presented a new model for small investors who may rent a lot of just 100 sq. m. of land in the Long Hau industrial zone. Japanese investors were also assured of administrative reforms with very simple paper work.

Licences will be issued in 24 hours after all forms are filled, authorities emphasised.

The Mekong Delta province has so far granted licences for 328 foreign investment projects capitalised at almost US$3.18 billion, including the 11 projects by Japanese investors with a combined investment of $188 million.

One of the 11 Japanese-invested projects was licensed in 2010 with a capital of $100 million.

The Japanese business mission, led by Sato Shi Abe, Director of the ASEAN investment sharing sector under the Japan centre, was shown around several industrial zones. The guests also visited the Vina Eco Board Limited Liability Company under the Sumitomo Group and the Kaiyo Seafood Processing Company.

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Mekong province promotes foreign investment

Long An province in the key southern economic zone presented a list of
its advantages and made offers to Japanese businesses at a meeting with
the Outward mission on August 23.

Pham Van Ranh,
Vice Chairman of the provincial People’s Committee, said like other
parts of the country, Long An has emerged as a destination for foreign
investors, citing advantages of political stability, steady economic
growth and an industrious workforce.

“The province has a good land reserve for industrial and urban development and infrastructure construction,” Ranh said.

Long An authorities confirmed that labour strikes in foreign
companies did not make any impact on the province. They also presented a
new model for small investors who may rent a lot of just 100 sq. m. of
land in the Long Hau industrial zone. Japanese investors were also
assured of administrative reforms with very simple paper work.

Licences will be issued in 24 hours after all forms are filled, authorities emphasised.

The Mekong Delta province has so far granted licences for 328 foreign
investment projects capitalised at almost 3.18 billion USD, including
the 11 projects by Japanese investors with a combined investment of 188
million USD. One of the 11 Japanese-invested projects was licensed in
2010 with a capital of 100 million USD.

The
Japanese business mission, led by Sato Shi Abe, Director of the ASEAN
investment sharing sector under the Japan centre, was shown around
several industrial zones. The guests also visited the Vina Eco Board
Limited Liability Company under the Sumitomo Group and the Kaiyo Seafood
Processing Company./.

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