Japanese survey acclaims improving business conditions

The number of profitable Japanese firms in Vietnam increased by 4 per cent in 2016, contributing to making Vietnam an attractive investment destination.

The Hanoi office of Japan External Trade Organization (JETRO) today announced the results of the annual survey on the business activities of Japan-affiliated companies in Asia and Oceania in 2016.

The survey was conducted in October and November 2016, covering nearly 11,000 Japanese firms investing in 20 countries and territories, of which 4,642 produced valid answers. In Vietnam, 1,285 Japanese firms joined the survey, of which 639 was found valid.

According to the survey, 62.8 per cent of Japanese firms in Vietnam claimed that they made profit in 2016, up 4 per cent since 2015. Specifically, from the manufacturing sector 59 per cent of export processing enterprises (EPEs) and 62 per cent of non-EPEs produced profit.

In comparison to other regional nations, this rate was higher than Thailand (61.9 per cent) and Indonesia (59.8 per cent), but lower than the Philippines (77.5 per cent), and China (64.4 per cent).

The survey also showed that 25.1 per cent of Japanese companies in Vietnam produced losses in 2016, up 1.1 per cent from 2015.

Regarding the risks of doing business, the majority (60 per cent) is still finds it risky doing business in Vietnam, with increasing labour costs, the imperfect legal system, and unclear legal performance, underdeveloped infrastructure (electricity, logistics...), and complicated tax procedures being the top concerns.

Nevertheless, according to the survey, Japanese firms' sense of security in Vietnam has much improved since 2015. In particular, 48.4 per cent included the imperfect legal system and unclear legal performance among the risks, down from 63.3 per cent in 2015. Meanwhile, 38.5 per cent complained about complicated tax procedures, down from 53.9 per cent in 2015.

Remarkably, in regard to favourable business conditions, Vietnam ranked fourth among 15 countries in political stability with 63.4 per cent. Over 50 per cent of Japanese firms also highlighted Vietnam's market scale and growth, as well as the cheap labour costs.

With increased revenue and growth prospects, 66 per cent of Japanese firms stated willingness to increase their business operations in Vietnam, up from 63.9 per cent in 2015. This rate was higher than the Philippines (54.4 per cent), Indonesia (51.6 per cent), Thailand (50.1 per cent), Malaysia (44.1 per cent), and China (40.1 per cent).

 

By Bich Thuy