There has been a significant increase in Japanese investment in Viet Nam’s non-manufacturing industries, such as retailing, education, healthcare, energy, finance and insurance, transport and real estate, according to a 2021 survey by the Japan External Trade Organisation (JETRO) of 700 Japanese FDI enterprises in Viet Nam.

Some 51.7 per cent of Japanese FDI firms in the manufacturing sector plan to expand business in Viet Nam over the next one to two years, up 4.6 per cent year-on-year, the survey found. About 58.7 per cent of non-manufacturing companies want to do the same, up 12.1 per cent.

Japanese enterprises are increasingly diversifying areas of operation in Viet Nam, said Hirai Shinji, Chief Representative of JETRO in HCM City. Before, most Japanese firms in Viet Nam were operating in manufacturing, but now FDI flows into food production, fast-moving consumer goods, retailing, and real estate are rising.

There is a shift from manufacturing to non-manufacturing sectors, Shinji told the Investment Review. He added that this was a considerable transition of Japanese investors to consumer goods and retailing from industrial production.

Despite input and labour costs having trended upward in Viet Nam in the past several years, they are relatively lower than Japan. Vietnamese workers have also been regarded as dynamic and highly productive.

For example, he emphasised that many Japanese firms in the IT and retailing sectors, which post relatively higher labour costs, are growing and expect to expand business in Viet Nam.

General Director of AEON Vietnam Furusawa Yasuyuki said major changes in Vietnamese consumer's shops due to COVID-19 significantly impacted e-commerce and demand for necessary goods.

Japanese firms view these changes as an opportunity, so investment in retail will definitely surge, he remarked on the sidelines of the Conference on Investment Promotion held by the Investment Promotion Centre South Viet Nam in HCM City earlier this month.

“Viet Nam has achieved encouraging economic growth, so I think many Japanese companies are considering pouring investment into the country,” he said.

He added that the services, equipment and consumer goods industries have huge potential for growth in Viet Nam, given the country’s fast-growing population, good economic outlook and improving living standards. — VNS