Over 65 pct of Japanese-invested companies in Vietnam post profits: survey

The number of Japanese-invested companies posting a profit in Vietnam rose last year, according to a recent survey conducted by the Japan Trade Organization (Jetro).

Of the 650 firms questioned by Jetro, 65.1 percent said they had turned a profit in 2017, up from 62.8 percent the previous year.

The survey also found that 70 percent of companies plan to expand their businesses in Vietnam.

Vietnam's market size, socio-economic stability and low labor costs all appeal to Japanese firms. However, the language barrier remains a big challenge.

A confusing legal system, low localization rate and complicated tax and administrative procedures are also barriers facing Japanese firms.

Jetro said the localization rate in Vietnam is estimated at 33.2 percent, much lower than 67.3 percent in China and 56.8 percent in Thailand, so Vietnam should increase its localization and help firms cut production costs.

Japan was Vietnam's largest foreign investor last year, pouring in $9.11 billion, or 25.4 percent of total FDI, according to the Foreign Investment Agency under the Ministry of Planning and Investment. 

Vietnam Chamber of Commerce and Industry (VCCI) is also working with SME Support, Japan (SMRJ) to bring more Japanese small and medium enterprises to Vietnam and vice versa. 

"Many large Japanese corporations are already present in Vietnam, offering quality and competitive products in familiar markets. In the near future, when Japanese small and medium enterprises strengthen their investments in Vietnam, I am confident there will be more cooperation opportunities in new markets," said Hoang Quang Phong, vice chairman of VCCI.