Vietnam becomes the next investment destination from Japan

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Terence Alford - Director of Capital Markets & Investment Services | Colliers International in Vietnam said: “The Vietnam IP / Industrial property market should clearly see more demand from Japanese companies over the next 6 to 12 months as a result of the Japanese Government initiative and funding commitment.

In comparison to other ASEAN countries Vietnam is considered to be a relatively stable business environment with promising economic growth, political stability and an ideal living environment for foreigners. The improved investment climate is attributable to the Vietnamese government’s concerted efforts to reform legislation, the taxation system, and administrative procedures over the past few years for Japanese Investors to see Vietnam as a more transparent destination to operate in".

The Japan External Trade Organization (JETRO) in earlier July released a list of 30 Japanese firms that are poised to receive subsidies from its government to move production facilities out of China, of them 15 eye Vietnam as a favorite destination.

The Japanese government has agreed to fund the relocation costs for Japanese owned companies to relocate their factories out of mainland China. Certain companies will relocate back home to Japan while many will locate to Southeast Asia and particularly Vietnam. The initiative is part of a new Japanese Government program to secure manufacturing supply chains and reduce the current dependence on manufacturing in China. An ongoing trend of factories moving from China to Vietnam for cost reasons and as a result of the USA – China trade war and tariff increases. 

Fifty-seven Japanese companies will receive a total of 57.4 billion yen ($536 million) in subsidies from the Japanese government and the Ministry of Economy, Trade and Industry. A further 30 firms will receive funds to relocate their manufacturing business to Vietnam and several other Southeast Asian nations.

Over 40% of 3,500 Japanese enterprises participating in a survey by the Japan External Trade Organization (JETRO) conducted at the end of 2019 said they are considering expanding operation in Vietnam in the next three years, up 5.5 percentage points from a year earlier, Kyodo News reported.