More than 60 per cent of Japanese firms operating in Viet Nam have intentions to expand their business here to cash in on the improved investment climate, a survey by Japan External Trade Organisation (JETRO) has revealed.

JETRO’s survey of the 2016 business conditions of Japanese companies in Asia and Oceania published yesterday in Ha Noi was carried out from October to November 2016, and it received responses from over 4,600 companies. In Viet Nam, it received valid responses from 639 firms.

The survey found that the major cited reasons for business expansion were sales increase and high growth potential.

The operating profits of Japanese firms in Viet Nam were also found to have improved. More than 62 per cent of respondents expected operating profits at least 4 percentage points higher than 2015 survey. This ratio was higher than Thailand and Indonesia but lower than the Philippines and China.

The raw materials and parts procurement rate increased to 34.2 per cent from the 32 per cent of the previous year but still lower than China’s 68 per cent of Thailand’s 57 per cent, according to Jetro, adding that Viet Nam should continue to improve the local procurement rate to reduce production costs.

Stable political and social situation is regarded as an advantage in Viet Nam’s investment climate, while wage increase is a significant risk. Other risks also include incomplete infrastructure and a complicated administrative and tax system.

According to Atsusuke Kawada, Chief Representative of JETRO in Ha Noi, the Government of Viet Nam is striving to improve the business climate and investment climate. However, the finding that nearly half of surveyed firms were worried about the incomplete legal framework of Viet Nam recommended that greater efforts were needed, he said.

He said Japanese firms tended to invest in non-manufacturing industries in Viet Nam, and agriculture would be a focus for Japanese investments in the future.

There are more than 1,200 Japanese firms operating in Viet Nam.

In a business forum held during Prime Minister Shinzo Abe’s two-day visit to Viet Nam in January, Prime Minister Nguyen Xuan Phuc expressed hope that Japan will become the top investor in the Southeast Asian country.

Latest statistics from the Viet Nam Foreign Investment Agency revealed that as of the end of November, Japan ranked second among 114 countries and territories with investments in Viet Nam, with 3,242 projects worth a total of US$42 billion. — VNS