HCM CITY (VNS)— Japanese companies are increasingly shifting their investments in Viet Nam to trade and services and relocating projects from China and Thailand to the country, according to the Government's news website chinhphu.vn.
|Sankoh Vietnam Co Ltd - a Japanese-funded company - produces sensor parts for electronic devices. Japanese firms are relocating their investments in the trade and service sector from other countries to Viet Nam. — VNA/VNS Photo Trong Dat
Hirotaka Yasuzumi, executive director of the Japan External Trade Organisation (JETRO), said that most Japanese enterprises wanted to set up shop in Viet Nam as part of their Thailand Plus One strategy.
Similarly, Japanese enterprises now in China have adopted a China Plus One strategy. Among Southeast Asian countries, Viet Nam is the primary choice.
The Japanese companies are particularly interested in the fields of trade and services and real estate in HCM City.
For instance, JETRO said Japanese investors in 2013 were involved in eight projects worth a total of US$3 million. But it rose to seven projects worth $134 million last year.
In July, Japan's Creed Group signed an agreement to invest $200 million into An Gia Real Estate Development and Investment Co for a 20 per cent stake in the Vietnamese real estate company.
Creed Group, which manages a portfolio of $5 billion assets, will provide 50 per cent of the capital for An Gia's project, providing Japanese-quality housing services in HCM City.
If the Vietnamese property market develops well, the Creed Group said it would inject hundreds of millions of dollars more in other An Gia projects.
Another Japanese investor, Toshin Development, plans to be involved in the underground trade centre at the Ben Thanh Terminal, the central terminal of the subway system that is now under construction. Total investment would be $300 million.
HCM City authorities have called for investments under the public–private partnership (PPP) model.
The trade and services sector has received interest from Japanese investors due to the drop in tariffs under the ASEAN-Japan Comprehensive Economic Partnership Agreement.
Under this agreement, more than 3,200 tax categories on materials, machinery and equipment, and electronics and electronic parts from Japan have had a zero tax rate since early April.
Goods imported from regional countries will also be cheaper than domestically made products as a result of tax cuts within the framework of the ASEAN Trade in Goods Agreement.
With these agreements, the Japanese have more reason to focus on trade development projects in Viet Nam.
Yasuo Nishitohge, general director of Aeon Viet Nam Ltd Co, said new tax policies had a positive impact on retailers.
The Aeon Group has four trade centres in Viet Nam with total investment of $512 million. Two centres are located in HCM City.
HCM City's Investment and Trade Promotion Centre said Japan was the sixth largest FDI investor in HCM City with 788 projects worth $2.72 billion, mostly in property, processing, manufacturing, wholesale & retail, engines, automobile repair and science-technology.
In the first six months of this year, bilateral trade between HCM City and Japan reached $3 billion, of which HCM City exports totalled $1.8 billion. — VNS