Vietnam is the top choice for Japanese companies looking to diversify their supply chains, the Japanese Ambassador to Vietnam has said.
Twenty two Japanese enterprises eligible to receive subsidies from its government to move production facilities from China have chosen Vietnam.
Japanese Ambassador to Vietnam Yamada Takio revealed the information at a dialogue between the Japanese business community and the Vietnamese government on December 21.
“Vietnam is the top choice for Japanese companies looking to diversify their supply chains,” Mr. Takio noted.
Taking into account 15 Japanese firms already chose to move to Vietnam in the first phase of the program in July, the total number of firms plans to invest in the country is 37 out of the total 81, while Thailand came in second place with 19 companies.
While the world is still struggling with the Covid-19 crisis, Vietnam has effectively put the pandemic under control and remains among a handful of economies with an estimated positive growth in 2020 at 2.6-3%.
In the first 11 months of this year, Vietnam’s trade turnover rose by 3.5% year-on-year to US$489 billion. “Only Vietnam can attain such a huge success,” he added.
“Vietnam, therefore, has become more attractive in the eyes of investors, including Japanese firms,” stated Mr. Takio.
The Ambassador expected Vietnam to be among the major beneficiaries from the Japanese government’s US$2.3 billon subsidy program to encourage companies to diversify their supply chains.
Mr. Takio raised three issues that he hopes would contribute to improve bilateral relations further, including the soon normalization of commercial flights between the two countries; greater disbursement of public investment; and simplification of investment licence granting procedure for Japanese companies.
In July, the Japan External Trade Organization (JETRO) released a list of 30 Japanese firms participating in government program to move production facilities out of China, with half of the list eyeing Vietnam as an alternative investment destination.
The majority of Japanese firms looking to move to Vietnam are in the fields of medical equipment, in addition to those producing semiconductors, phones and parts, and air conditioners, among others.
JETRO said the financial support will range from US$900,000 – US$46.5 million to partly cover the required expenses of Japanese firms in expanding operation.
Takeo Nakajima, chief representative of the Japan External Trade Organization (JETRO) in Hanoi told Hanoitimes this program is not targeted at any country, and the policy package will encourage firms to strengthen supply chain resilience.
According to the survey by JETRO late last year, Vietnam was the second-highest country in the “business expansion” ranking among the Japanese respondents, while 41% of the respondents planned to “expand the operation in Vietnam”.
“Japanese companies attach much importance to the country’s market size, friendliness to Japan, and the quality labor force,” he noted.