A working team of 11 Japanese economists led by Seki Mitsuhiro, professor of Hitotsubashi University arrived in Vietnam early September to carry out a survey on Vietnam’s business and investment environment for small and medium Japanese enterprises. Excerpts from an interview with Mitsuhiro:
Why did you choose Vietnam to carry out a survey on investment environment and not another country in the region?
Japanese businesses began paying more attention to Vietnam from the end of 2002, since they have made excessive investments in China (with about 200,000 projects) and other markets including Malaysia, Thailand, and Singapore. The concentrated investment in China has resulted in an imbalance in terms of investment risks. Meanwhile, Vietnam has recently emerged as an attractive venue for foreign investors. Even local investors in Japan are very interested in the business environment in Hanoi. Since Hanoi is very close to China’s Guangdong province, which is considered one of the leading production hubs in the world, it is an ideal place for investors engaging in production and supply of materials, and components for production.
In addition, Japanese investors are cognisant of Vietnam’s great efforts in improving the investment environment. Another factor is that it is now too late for small and medium sized enterprises in Japan to enter the Chinese market.
The main objective of our working visit to Vietnam is to assess the business environment here and make recommendations to Japanese businesses who are interested in this market. We have worked with 40 Japanese and Vietnamese companies in different trades during our two week field trip in Hanoi, HCM City and adjacent areas. We will publish a report on the investment environment in Vietnam next spring.
What is the team’s assessment on the investment environment in Vietnam?
I think the government should direct foreign investors to rural areas to create a momentum for small and medium enterprises (SME) in these regions. To attract more investors, Vietnam need not only build more industrial parks and export processing zones but also develop more support industries to produce components and spare parts for foreign investors.
So what should Vietnam do to achieve these targets?
The first thing is to create a convenient environment for SMEs so that they can secure their post in the market. In China, for instance, even the communal and district authorities have actively participated in promoting the investment environment in their localities to foreign investors. Another thing, in my opinion, is that major cities in Vietnam should cooperate with cities in Japan. The cooperation will enable Japanese investors to easily travel and conduct their business in Vietnam. In addition, Vietnam should establish investment promotion agencies to introduce Vietnam to other countries in the world.
What do you think about recent rumours here that another flow of Japanese investment to Vietnam is imminent?
I also think so. This flow will last for one to two years but the matter of concern is what Vietnam will do to retain the investment. Vietnam will have to build more IP/EPZs, but the crucial matter is if the local human resources are competent to meet the needs of Japanese investors.