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Vietnam ranks second in the list of foreign destinations that Japanese businesses wish to invest in. Digital transformation and green growth are issues suggested for inclusion in the Vietnam-Japan Joint Initiative in the future.

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			<td style="text-align:justify"><img alt="The production of solar battery at Vietnam Sunergy Joint Stock Company (a company with 100% Japanese capital) in Dinh Tram Industrial Park, Bac Giang province. (Photo: DONG THUY)" src="https://image-en.nhandan.vn/w800/Uploaded/2023/eclyestesfj/2023_03_27/nhat-6303.jpg" /></td>
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			<td style="text-align:center">The production of solar battery at Vietnam Sunergy Joint Stock Company (a company with 100% Japanese capital) in Dinh Tram Industrial Park, Bac Giang province. (Photo: DONG THUY)</td>
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The economic cooperation relationship between Vietnam and Japan has achieved remarkable and comprehensive development after 50 years of establishing diplomatic relations. Japan is currently Vietnam&rsquo;s leading economic partner, with economic, trade and investment cooperation always being especially focused and promoted.

Large room for cooperation

Japan currently has more than 5,000 valid investment projects in Vietnam with total registered capital of more than 69 billion USD, ranking third among the 141 countries and territories investing in Vietnam. Japan&rsquo;s investment flow is present in 57 out of 63 provinces and cities in Vietnam, with a focus in Ho Chi Minh City and Hanoi.

Meanwhile, Vietnam currently has 104 investment projects in Japan with total registered capital of 19.2 million USD, ranking 36th out of the 79 countries and territories receiving investment from Vietnam.

In terms of trade, Japan has become Vietnam&rsquo;s fourth largest trading partner with bilateral import and export turnover of nearly 50 billion USD in 2022. Attracting investment capital from Japan is also an important goal in the socio-economic development plans of many localities throughout Vietnam.

Localities in the key economic zone of the Red River Delta such as Hai Phong, Quang Ninh, Hai Duong, and Hung Yen say they are ready to realise cooperation opportunities between Vietnam and Japan in the fields of high-tech agriculture, manufacturing, renewable energy, and circular economy.

Notably, the Vietnam-Japan ODA relationship is one of the most successful bilateral development cooperation relationships of Vietnam in recent years. Deputy Minister of Planning and Investment Tran Quoc Phuong said that Japan&rsquo;s ODA currently accounts for more than 30% of bilateral development aid for Vietnam, including more than 2.7 trillion JPY in loans, nearly 100 billion JPY in non-refundable aid, and 180 billion JPY in support of technical cooperation.

Japan&rsquo;s ODA capital plays an important role in Vietnam&rsquo;s socio-economic development through the implementation of large-scale infrastructure development projects such as Tan Son Nhat Airport, Noi Bai Airport, Nhat Tan Bridge, and the seaports of Cai Lan, Lach Huyen, and Cai Mep-Thi Vai, creating a driving force for Vietnam&rsquo;s socio-economic development. This is also an important source of capital to contribute to the transfer of advanced technology and training of human resources, and others. Many advanced technologies will be transferred to Vietnam through ODA loans, such as satellite assembly, and bridge and road construction engineering.

Apart from its appeal as a production base, Vietnam, as a country with a population of nearly 100 million, the majority of whom are young, has also become attractive for expanding the services sector and startups for Japanese enterprises, said Chairman of the Japan-Mekong Business Cooperation Committee Yoshihisa Suzuki at the recent Vietnam-Japan Economic Forum 2023. The number of Vietnamese living in Japan is also increasing, which is a factor that brings the people of the two countries closer together while making the exchange of technology more essential.

Proposals for the next phase

The Vietnam-Japan Joint Initiative ended phase 8 in March 2023 after 20 years of implementation, in which 497 out of 597 items were completed well on schedule. The Ministry of Planning and Investment proposes to develop a cooperation programme between the small and medium-sized enterprises of the two countries to further promote the role of the Vietnam-Japan Joint Initiative. The programme will focus on the field of digital transformation, development of supporting industries, and training of human resources.

Japanese small and medium enterprises have a lot of potential and advantages to cooperate with Vietnamese ones in technology transfer. Japanese enterprises have good capacity, experience, and high technology while Vietnamese enterprises have abundant human and labour resources, which can complement each other in the process of cooperation and development. Notably, these are the contents under phase 8 of the Vietnam-Japan Joint Initiative, which need to be deepened in the future to meet the requirements of the two countries in the new context.

The Ministry of Planning and Investment proposed that the Japanese side need to have more specific solutions and additional resources to strengthen connectivity and support for Vietnamese businesses to improve their capacity and competitiveness, participate deeply in the chain value, and increase the efficiency of investment cooperation through specific projects.

The survey results on the current situation of Japanese enterprises investing abroad in the fiscal year 2022 published by the Japan External Trade Organisation (JETRO) show that 60% of Japanese enterprises plan to continue expanding their business in Vietnam, accounting for the highest proportion in Southeast Asia. This shows that Japanese enterprises attach great importance to the Vietnamese market.

With the goal of becoming a middle-income country by 2030, Vietnam is focusing on promoting science and technology, innovation, digital transformation, green transformation, green economic development, digital economy, circular economy, and knowledge economy. In that journey, Vietnam wishes to receive the companionship of the business community, especially Japanese enterprises with suitable potential in the prioritised areas of the Vietnamese Government.

In order to meet development requirements in the coming period, Vietnam encourages Japanese enterprises to expand investment cooperation in infrastructure, energy, manufacturing, high-quality agriculture, information technology, smart cities, financial services, banking, and innovation. The Vietnamese government is committed to accompanying the business community by supporting and creating all favourable conditions for investment and business activities, thus bringing more benefits to the parties and contributing to lifting Vietnam-Japan relations to new heights.

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