HANOI - Vietnam is
now the first choice for Japanese investors
seeking investment opportunities among ASEAN
countries, according to a recent survey conducted
by the Japan External Trade Organization
(JETRO).
The annual report surveyed 966
Japanese-affiliated manufacturers operating in
ASEAN-member nations Indonesia, Malaysia, the
Philippines, Singapore,
Thailand and Vietnam, as well as India, in January
and February 2006.
The majority of
respondents were operating in five key production
industries: transportation equipment parts
(15.4%), electronic components (14.8%), metal
products (7.8%), chemicals (7.7%), and electronic
equipment (7.5%).
The survey revealed an
increasing trend among Japanese manufacturers of
moving production bases from one ASEAN country to
another. The number of Japanese manufacturers
considering an expansion of production in ASEAN
nations was highest in Vietnam (20.5%), nearly
three fold higher than in Thailand (7.4%), it
found.
Thailand and Vietnam are seen as
optimal industrial production bases in the region
with a positive mid and long-term outlook, it
said. The two nations are especially attractive
for companies involved in the manufacture of
electric and electronic products and components.
The survey found Vietnam to be one of the leaders
in the production of transportation equipment,
however chemical production was described as a
weak point in the nations industrial
sector.
More than half of the Japanese
investors who responded to the survey cited lower
production costs as the main attraction for
investment in the country, while many others
highlighted Vietnam's strong economic growth in
recent years. The report suggested bright economic
prospects were generating big business
opportunities.
While the JETRO report
pointed to Vietnam's stable political and social
conditions and effective labor management, it also
suggested the nation suffered from weak supporting
industries and inadequate infrastructure, which it
said were impeding Vietnams investment
environment.
Supporting industries in
Vietnam were found to have the lowest capacity of
all countries considered in the survey, while the
report described Vietnams infrastructure as just
slightly better than that of India, which it
ranked last in the category.
Other
obstacles hindering investment in Vietnam were
difficulties with customs procedures and
intellectual property rights protection, it added.
The survey said Vietnam and Indonesia has not
fared as well as other ASEAN countries and India
in this respect.
Half of respondents of the
survey said their businesses performed better last
year than the year before, while 30% indicated
they had experienced difficulties. However, 54.1%
of surveyed Japanese investors expect to report a
stronger performance this year, while 17.6%
predicted a deterioration.
About half of
the respondents cited improvement in production
efficiency as a basis for anticipated business
growth, while 41% expected better export numbers,
and 33% said the production of value-added
products was expected to spur
growth.
Japanese investment is likely to
expand in all the countries surveyed in the
report, particularly in Vietnam and India, it
said. Fully 78.6% of responding investors said
they planned to expand business operations in
Vietnam within the next two years.
The
Ministry of Planning and Investments Foreign
Investment Agency recently reported Japanese
investment capital in Vietnam nearly doubled
between 2004 and 2005, and that investment capital
registered in the first quarter of 2006 was more
than five times higher than during the
corresponding last year, it
added.
