Japanese FDI rebounds

Japan is gradually moving towards regaining its leading position in foreign direct investment (FDI) in Vietnam after a period of lagging behind other countries.

According to the Foreign Investment Agency (FIA), Japan invested $1.94 billion into Vietnam during the first five months of this year, accounting for 16 per cent of all FDI in the country and ranking it second.

South Korea continued to lead the way, with total investment of $4.41 billion, accounting 36.4 per cent.

Singapore was third, with investment of $1.23 billion, accounting for 10.21 per cent.

By 2014, Japan had lost its leading place after several years at the top, with $2.05 billion in investment, down sharply from $5.87 billion in 2013. In 2015, its total investment declined yet again, to $1.84 billion.

Japan was squeezed out of the Top 3 largest investors in Vietnam during the first quarter, by China.

However, with a rise in investment capital to over $1 billion, Japan then surpassed China in April, pushing it into fourth place.

As at May 20, total FDI in both newly-registered projects, additional capital to existing projects, and contributed capital to purchase shares had reached $12.13 billion this year, up 10.4 per cent year-on-year. Disbursement was $6.15 billion, up 6 per cent year-on-year.

Investors poured capital into 18 sectors, including $8.09 billion into manufacturing and processing, accounting for 66.7 per cent of newly-registered capital in the first five months, followed by mining, with $1.28 billion. Wholesale and retail was third, with $798 million.

FDI inflows have gone to 58 cities and provinces, in which northern Bac Ninh province attracted the most, with $2.76 billion. Southern Binh Duong province ranked second, with $1.64 billion, followed by Ho Chi Minh City with $1.39 billion.

According to a recent survey by the Japan External Trade Organization (JETRO) in Hanoi, more than 60 per cent of Japanese enterprises in Vietnam plan to expand their business and continue to view the country as an important investment destination.

The main reason for the business expansion plans is that enterprises want to increase revenue. For non-manufacturing businesses, the main driving force is high growth potential.

Some 62.8 per cent of the more than 600 businesses participating in the survey said they are profitable, up 58.8 per cent from 2015 and higher than in Thailand and Indonesia but lower than in the Philippines and China.