Japanese businesses trust and expand in Vietnam despite challenges

According to a survey conducted by JETRO in Ho Chi Minh City, over 47% of Japanese businesses investing in Vietnam believe that business prospects in 2022 have improved compared to 2021. 

Furthermore, almost 54% of companies trust the business profit prospects in 2023, with only about 7% saying they would decline. 

The survey also revealed that 60% of Japanese businesses plan to expand their business operations in Vietnam in the next 1-2 years, while the proportion of companies looking to narrow or switch to another country decreased to just over 1%.

However, the survey also highlighted some challenges facing Japanese businesses in Vietnam. The proportion of loss-making companies was still relatively high at 20.8%, with difficulties in procuring components, raw materials, logistics costs, increasing labor costs, and exchange rate fluctuations being the leading reasons. 

The domestic procurement rate of Vietnamese enterprises was also low at only 15%, despite foreign companies such as China and Japan switching to procurement in Vietnam.

JETRO is working with the Vietnamese government to promote more effective administrative procedures and support administrative reform to address these challenges.

While the business environment in Vietnam has the potential for growth, there are still areas for improvement to attract and retain foreign investment.

Source: Bao Sai Gon Dau Tu Tai Chinh