With growing competition from other regional countries, Japanese investors will make more careful investment decisions in Vietnam, experts said.
Vietnam is facing increasing competition from regional countries
Yasuaki Tanizaki, the Japanese Ambassador Extraordinary and Plenipotentiary to Vietnam, said at a recent international seminar that Japanese investors currently take into account, not only infrastructure conditions but also their own economic interests, when making investment decisions.
The seminar, held on March 22, was to discuss measures to encourage small and medium-sized Japanese enterprises to invest in support industries in Vietnam’s industrial parks and export processing zones.
In order to attract more Japanese investment, Vietnam should increase efforts to curb inflation and increase the value of the dong, Tanizaki urged.
According to him, the lingering trade deficit has been adding to Vietnam’s economic instability due to the country's heavy reliance on imports for component parts for local processing.
“Vietnam has set up more and more industrial parks and invited us to invest, however the reality is not as simple as your expectations. Investors make careful and thorough consideration of all business conditions before coming to a final decision,” he noted.
Tsuno Motonori, JICA's Chief Representative in Vietnam, estimated that after 2015, when ASEAN creates a free trade area, the country will encounter fiercer competition from other countries in the region, which will force the development of support industries in order to remain an attractive investment option.
Professor Kenichi Ohno, Director of the Vietnam Development Forum (VDF), said that despite the nation having obtained high rates of economic growth in recent years, the quality of that development is still far from what was expected.
“The development of several other countries, especially Myanmar, may affect Vietnam’s competitiveness in the near future. In addition, Cambodia, the Philippines and India have built industrial parks solely for Japanese investors,” Ohno said.
As part of the effort to help improve Vietnam’s competitiveness, JICA has assigned experts to Vietnam to serve as advisors and consultants to the Vietnamese Ministry of Planning and Investment.
The Vietnam - Japan Human Resources Cooperation Centre (VJCC) has helped Vietnam train a lot of young entrepreneurs, he shared.
He also noted that, apart from the lack of well-trained workers, Vietnam is facing serious power shortage problems, which causes worries for potential foreign investors.
More attention should be paid to the development different sources of energy, including thermal, hydro and nuclear power, as well as renewable energy, he added. Also, he said, priority should be given to industrial parks for power supply.