State visit gives boost to Vietnam-Japan relations

On the back of the strengthened relationship and commitments between Vietnam and Japan, as well as Vietnam’s rising demand for investment, firms from both countries are fast-tracking their business and investment ties.

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Japanese firms continue to invest in local development, from healthcare and high technology to retail and aviation

- State President Tran Dai Quang may be the only state guest of Japan in 2018. His visit to Japan is the most important event out of over 100 events organised by the two countries this year to celebrate their 45th anniversary of diplomatic relations.

- From 1992 to the 2016 fiscal year, Japan committed $30.5 billion in official development assistance (ODA) to Vietnam. In 2017, the two sides signed deals worth over $1 billion in ODA. During this visit, Japan committed to an ODA sum worth $142 million for Vietnam to develop vocational training.

- Bilateral trade turnover hit $33.4 billion last year, and $8.7 billion in this year’s first quarter.

- Vietnam and Japan upgraded their relationship to the “Extensive Strategic Partnership for Peace and Prosperity in Asia” in 2014.

- Japan was the first of the G7 nations (Canada, France, Germany, Italy, Japan, the UK, and the US) to welcome a visit by Vietnam’s Party General Secretary (1995), to forge a strategic partnership with Vietnam (2009), to recognise Vietnam’s market economy status (2011), and to invite Vietnam to attend the G7 Summit (Japan 2016).

Japan’s International Total Engineering Corporation (ITEC) is now busy partaking in the design of a multimillion-dollar project to build a 40ha high-tech healthcare complex in Hanoi. The project’s investor is Vietnam’s TH International Medical Development JSC.

One year ago, in Tokyo, a memorandum of understanding (MoU) on developing this 50-year project was signed. Under the MoU, ITEC will supply services for management, operation, and human resources training for this complex. All doctors and nurses at the complex will receive ITEC training.

It is expected that construction will begin later this year and take three years to complete.

This project is among many upcoming projects either partaken in or invested in by Japanese firms in Hanoi and other localities in Vietnam.

Last week in Tokyo, Japan’s NIDEC Corporation was licensed for a project worth $1 billion in Hanoi’s Hoa Lac Hi-tech Park. NIDEC is finalising procedures for construction in order to operate the plant in 2019’s first quarter. The plant will manufacture electric motors.

Also last week in Tokyo, AEON Group was licensed to build a $180 million mall in the northern city of Haiphong. In March, AEON commenced construction of its mall in Hanoi’s Ha Dong district, with a total capital of $90.4 billion. The general contractor designing and constructing the project is a joint venture between Hoa Binh Construction Corporation and Kajima Corporation. This is the second AEON mall in Hanoi, and the fifth in Vietnam.

Heavy investments

NIDEC and AEON are among many Japanese firms to have received investment licences during Vietnamese State President Tran Dai Quang’s state visit to Japan from May 29 to June 2, during which firms and localities from the two countries finalised deals worth about $1 billion, focusing on many projects in Vietnam relating to aviation, retail, garment and textile, renewable energy, IT, and urban development.

For example, Vietjet Air launched a direct air route linking Hanoi and Japan’s Osaka, which will officially become operational from November 8. This is Vietjet’s first foray into Japan.

“In the future, Vietjet Air will continue many more air routes from Vietnam to other cities in Japan,” said the firm’s deputy general director Nguyen Thi Thuy Binh.

Vietjet also signed an MoU on aircraft financing worth nearly $600 million with Japanese financial firms SBI Leasing Services and Natixis.

In another case, Vietnam’s central province of Quang Tri made a deal with Japan’s largest egg producer, ISE Food INC. Besides egg production, the two sides will construct a solar power plant and invest in high-tech breeding and food processing in the province.

Last November, firms from Vietnam and Japan also finalised co-operation agreements worth about $5 billion, as witnessed by both President Quang and Japan’s Prime Minister Shinzo Abe at their meeting in the central city of Danang.

The agreements relate to some thermal power plants in Vietnam, including Nghi Son 2, Van Phong 1, and Vung Ang 2. There is also a co-operation deal between Japan’s Mitsui Bussan and PetroVietnam.

Japan’s Deputy Minister of Economy, Trade, and Industry Yoji Muto said at the Japan-Vietnam Business Forum during Quang’s visit to Japan that Vietnam has high economic growth, with rising demand for infrastructure – which is attracting Japanese firms.

“Vietnam is becoming an extremely valuable economic partner of Japanese enterprises,” Muto said.

As of April 20, 2018, Japan was Vietnam’s second-largest foreign investor, with 3,725 valid investment projects registered at over $50.5 billion. In 2017, Vietnam attracted $9.11 billion in Japanese investment, four times more than in 2016.

Japan currently has over 2,500 firms in Vietnam, including many large ones such as Sony, Panasonic, Canon, Mitsubishi, and Marubeni.

The largest project is a $2.79 billion coal power plant invested by Japan’s Marubeni and Korea Electric Power Corporation in the province of Thanh Hoa. The project, implemented via a build-operate-transfer contract, is expected to become operational in 2021.

Sumitomo’s $2.64 billion coal plant in the province of Khanh Hoa will be another notable project, expected to commence operations by 2022, while Mitsui Oil Exploration is participating in a $1.27 billion gas pipeline project in Kien Giang province.

Japan’s small- and medium-sized manufacturers, distributors, and service companies have stepped up spending, and more firms are buying into Vietnamese enterprises. For example, Sekisui Chemical acquired a 15-per-cent stake in state-owned Tien Phong Plastic in October 2017 as part of Vietnam’s reforms to state enterprises.

Strong commitments

During his stay in Japan, State President Quang met with Emperor Akihito, Empress Michiko, Prime Minister Shinzo Abe, and other leaders. The two sides vowed to further the two countries’ investment ties.

While meeting with the chairpeople of many large member companies of the Japan Business Federation and Japan Chamber of Commerce and Industry, Quang stated that Vietnam treasures private investors and foreign direct investment as an important impetus for its socio-economic development.

“We encourage Japanese firms and investors to invest into Vietnam in the sectors of infrastructure, supporting industry, high-tech agriculture, energy, environment, finance, and banking. Japanese firms and investors are also encouraged to participate in the equitisation of state-owned enterprises in Vietnam, and to provide training for Vietnam’s work force,” Quang said. “The state of Vietnam commits to create the best conditions for Japanese firms to effectively do stable, long-term business in Vietnam. We always consider your success in Vietnam the country’s success.”

According to Japanese Ambassador to Vietnam Umeda Kunio, the two countries share “many strategic interests”. For Japan, Vietnam is a reliable partner. Currently, Vietnam is grabbing development opportunities and its sustainable development is in line with Japan’s national interests.

“Japan wishes to boost co-operation with Vietnam in the sectors of infrastructure and human resources in support of Vietnam’s on-going administrative and financial reforms,” Kunio said.

ITEC, as well as co-operating with TH International Medical, will continue to co-operate with many other firms and hospitals in Vietnam to provide design and training services. Since 2012, ITEC has implemented dozens of projects in Vietnam.

“I believe trust is the most important element of our business, because trust can only be gained through satisfactory results from professional consulting services. We will continue to make every effort to provide the very best services to clients in the corporate spirit of self-discipline, reinvention, and creativity,” said ITEC’s president Johtaro Seki.


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