A production line at Japanese invested EXEDY Viet Nam Company in Khai Quang Industrial Zone in Vinh Phuc Province. Viet Nam has become a top priority for Japanese foreign investment. — VNA/VNS Photo Danh Lam

HA NOI (Biz Hub) — Viet Nam has numerous advantages that could attract more foreign direct investments (FDI) from Japan in the future, according to experts.

Sato Motonobu, chairman of the Association of Japanese Investors in Viet Nam, said Viet Nam has great advantages in competition on attracting FDI from Japan with other countries, reported Government portal chinhphu.vn.

The advantages include political stability, similar culture and religion, and a potential market along with a young labour force, he said.

Atsusuke Kawada, chief representative of the Japan External Trade Promotion Organisation (JETRO), said 30 per cent of Japanese enterprises with investments in foreign countries have considered Viet Nam as one of the leading choices. In Jetro's report released in February, Viet Nam became the first priority for Japan while investing in foreign countries, over rivals Indonesia, Thailand and the Philippines, he said.

Meanwhile, 70 per cent of existing Japanese investors in Viet Nam are planning to expand their business this year, he said.

However, experts said Viet Nam still faced challenges in attracting more FDI from Japan.

Japanese investors said the Vietnamese business environment still had a lack of synchronous policies, complicated administrative procedures and high tax and fees.

Motonobu Sato said Viet Nam still lacked managers in both quantity and quality and infrastructure along with unstable power generation sources.

Yasuaki Tanizaki, Ambassador of Japan to Viet Nam, said that to attract stable investment from Japan in the long term, Viet Nam should have administration reforms, complete its infrastructure projects and improve human resources.

Minister of Planning and Investment Bui Quang Vinh agreed that if Viet Nam did not improve its investment environment, Japanese FDI would go to regional countries around Viet Nam, including Indonesia, Myanmar, Laos and Cambodia.

Vinh said the government and provinces/cities of Viet Nam have found solutions to attract and support foreign investors in all fields, especially administration reforms and reduction of taxes.

Viet Nam expected Japanese investors to have a regular exchange of views on investment activities with the government. This would ensure that the government has timely solutions in solving difficulties of investors, Vinh said.

Viet Nam expects Japanese enterprises to promote the transfer of technology to firms here and also encourages Japanese investors to invest in the farming sector.

Recently, Tokyo Bank of Japan has proposed to support interest rates for Japanese investors when they invest in the farming sector in Viet Nam.

The Ministry of Planning and Investment's report said Japan was the largest foreign direct investor for 2012 and 2013.

In the first half of this year, FDI from Japan to Viet Nam was more than US$800 million, lower than the same period of last year due to weaker yen. Japan has largest FDI volume in Viet Nam with 2,300 projects and a total registered capital of $35 billion. — VNS