Quality of Japanese Investment Flows Raised
Japan is now among top investors in Vietnam, said Foreign Investment Agency (FIA) under the Ministry of Planning and Investment. Japanese foreign direct investment (FDI) and official development assistance (ODA) are mainly channelled into manufacturing, processing, real estate, urban infrastructure and transport projects.
Leading investor in Vietnam
Mr Dang Xuan Quang, Deputy Director of Foreign Investment Agency, said, the Government of Vietnam attaches special importance to attracting more FDI inflows and considers FDI an important resource for the country’s economic development.
Mr Kumio Umeda, newly-appointed Ambassador of Japan to Vietnam, said, this is seen as a golden milestone in Vietnam – Japan economic and commercial relations. Economically, in 10 years, the trade revenue between the two strategic partners trebled from US$9,933 million in 2006 to US$28,506 million in 2015. Since 2012, each year, Vietnam receives over 300 Japanese investment projects, accounting for 14 per cent of total FDI value in Vietnam.
Besides, the number of members of the Japan Business Association in Vietnam increased rapidly from 441 in 2005 to 1,550 in 2016. This upward trend is forecast to continue in the coming time. The Japan – Vietnam Joint Initiative Cooperation Programme, initiated in 2003, has undergone the sixth phase of application. So far, by implementing over 80 per cent of total over 470 items, the initiative has continued to make an effort to improve the investment environment in Vietnam. The initiative is an important content in the economic – commercial – social cooperation between Vietnam and Japan.
Japan has been always the biggest ODA donor for Vietnam for years, eyeing to bring sustainable development to Vietnam by helping it enhance international competitiveness and overcoming difficulties and building a fair and civilised society. This is an indirect way Japan supports Vietnam to fulfil the goals of macroeconomic perfection strategy. By doing this, Japan has been assisting Vietnam to implement national industrialisation objectives and economic development, said Ambassador Umeda Kumio.
Bright spot in real estate sector
According to property experts, in addition to classical investment fields, Japan’s FDI and ODA flows tend to land on the real estate market of Vietnam with projects worth billions of US dollars.
Mr Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, said, Japanese investors will likely pour US$2 billion in the Vietnamese real estate market. This is a good sign for the real estate market because human resources of many domestic real estate firms have improved and this is a good time to expand foreign investment attraction. Furthermore, this is a favourable time to draw Japanese investment into domestic real estate projects. In addition to the strategic framework of political and economic cooperation, the two countries shared a lot of similarities in culture and geography. For their parts, Vietnamese investors are seeking big partners with huge financial capacity and good governance for large projects (according to current regulations, in a project covering an area of over 20 hectares, the owner’s capital is 15 per cent). Japanese investors always place top priority to scientific and expert management.
The most evident testament is the latest cooperation between The Global Group – a leading property investor, developer and manager in Japan – with Dream House Joint Stock Company. Dream Home Palace situated in District 8, Ho Chi Minh City is estimated at US$50 million of the investment capital.
Specially, apart from financial investment, with the comprehensive strategic partnership, the Japanese partner will transfer experience development, technology, engineering, operational and administrative procedures of Japanese standards to this project. Kajima, a property giant from Japan, planned to invest US$1 billion in a joint venture with a local investor in 10 years. The joint venture will develop upmarket properties and serviced apartments in Vietnam. Its projects will have investment capital of US$19.5 to US$97.5 million.
Giving explanations to huge investment into real estate projects in Vietnam, Mr Hidekazu Nagashima, Chairman of The Global Group, Japan, said, this is simply an investment option by big Japanese investors. As deposit interest rates at banks in Japan are almost zero and the property market reaches the point of saturation, giant companies with huge unemployed capital have to seek potential markets for their money to be used. And, Vietnam has emerged as a very attractive destination, he stressed.
Needless to say, the close relationship between Vietnam and Japan provides the premise for fine investment cooperation in all aspects of economy, trade and investment.