Why Japanese Companies will Increase Investment into Vietnam

When Japan sought to diversify the investment other than to China, Vietnam emerged as attractive destinations for international investors.

Within the last few years, companies doing business in China began diversifying its investment and reduce dependence on the China market. This is the result of increasing labor costs as well as the structural reforms taking place in China. In this context, Vietnam emerged as a potential destination for foreign companies which are looking for new investment opportunities.  Entering into Vietnam will open up open up a large domestic market at a geographic advantage location for Japanese companies.

In 2013, for the first time, China lost the top spot as a promising destination for Japanese investors. Japanese companies are now investing in Indonesia, India, Thailand and Vietnam. This does not mean that Japanese firms will withdraw from China, they are simply looking for new investment destinations.

Vietnam has increasingly become popular for Japanese companies making investment. The Japanese investment in Vietnam has increased rapidly, especially since the Treaty of the Economic Partnership Vietnam-Japan went into effect in 2009. The Japan’s largest investment are in transportation infrastructure transportation, electrical equipment manufacturing sector. Vietnam is one of the fourth largest motorcycle markets in the world, and therefore Japanese companies such as Honda or Yamaha are here to increase investment. The Japanese electronics company also raised the capital of investment, partly because Samsung has developed a mobile plant to produce a series of Galaxy smartphones. Panasonic is looking for business opportunities in the domestic electrical equipment and has seen Vietnam as a key market in the emerging countries. Teral, a leading Japanese industrial pumps and fans have just opened up its Vietnam office.  Canon has been investing in Vietnam for many years with success.  For the non-manufacturing sectors such as finance and insurance industry, capital investment has also increased significantly, for instance, Mizuho, Tokyo and Mitsubishi in banking, Dai-ichi Life in life insurance.

In addition, small and medium enterprises in Japan (SMEs) are looking for business opportunities in foreign countries due to increasing challenges they are facing in Japan. The domestic market has been shrinking due to aging population; larger companies that have contracts with the SME business are moving abroad, while competition with foreign companies in Japan has been increasing. After the global financial crisis of 2008, the Japanese companies have increased investment abroad to survive. Therefore, Vietnam should promote measures to adapt to small businesses from Japan.

In addition, both Vietnam and Japan are engaged in the process of negotiating Trans-Pacific Partnership (TPP). At the end, the TPP will help promote trade and investment, but it also leads to changes in the industrial structure and the domestic economy. It will be a challenge, especially for a developing country like Vietnam. In this context, Vietnam and Japan is an important partner of the other. Both countries will benefit from the closer economic relationship and cooperation.

ANT Consulting is here to assist you from the outset; providing intelligence, information, management or support and administrative services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

• Market Entry
• Tax Advice
• Legal Advice
• Outsourcing Services

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or tel: +848 3520 2779 .  To learn more about us, please visit www.antconsult.vn

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Investment Through Signing Contracts in Vietnam

Business co-operation contract (BCC) means the investment form signed between investors in order to co-operate in business and to share profits or products without creating a legal entity.

Build-operate-transfer contract (BOT) means the investment form signed by a competent State body and an investor in order to construct and operate commercially an infrastructure facility for a fixed duration; and, upon expiry of the duration, the investor shall, without compensation, transfer such facility to the State of Vietnam.

Build-transfer-operate contract (BTO) means the investment form signed by a competent State body and an investor in order to construct an infrastructure facility; and, upon completion of construction, the investor shall transfer the facility to the State of Vietnam and the Government shall grant the investor the right to operate commercially such facility for a fixed duration in order to recover the invested capital and gain profits.

Build-transfer contract (BT) means the investment form signed by a competent State body and an investor in order to construct an infrastructure facility; and, upon completion of construction, the investor shall transfer the facility to the State of Vietnam and the Government shall create conditions for the investor to implement another project in order to recover the invested capital and gain profits or to make a payment to the investor in accordance with an agreement in the BT contract.

Foreign investors may sign BOT, BT and BTO contracts with a competent State body to implement infrastructure construction projects in Vietnam. Typically, the contracts are for projects in the fields of transportation, electricity production, water supply, drainage and waste treatment.

The rights and obligations of the foreign investor will be regulated by the signed BOT, BT and BTO contract. The Government encourages both public- and private-sector investors to participate in BOT, BTO and BT in the following sectors:

(i)   Construction, operation and management of brand-new infrastructure facilities; and

(ii)  Renovation, expansion, modernization, operation and management of the existing infrastructure facilities such as:

•     Roads, bridges, tunnels, and ferry landings;

•     Railway bridges and railway tunnels;

•     Airports, seaports and river ports;

•     Clean water supply systems; sewage systems;

•     Wastewater, waste collecting and handling systems;

•     Power plants and power transmission lines;

• Infrastructure works of health service, education, training, career training, culture, sport and offices of State agencies; and

•     Other projects as may be determined by the Prime Minister

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Vietnam Supports Australian Enterprises Investing and Setting-up Business in Vietnam

DURING AN OFFICIAL VISIT TO AUSTRALIA, IN THE MORNING OF MARCH 17TH (LOCAL TIME), IN SYDNEY, PRIME MINISTER NGUYEN TAN DUNG AND HIGH-LEVEL DELEGATION TO THE GOVERNMENT OF VIETNAM HAD THE DIALOGUE WITH THE BUSINESSES OF VIETNAM AND AUSTRALIA’S ON THE DEVELOPMENT OF VIETNAM’S ECONOMY AS WELL AS THE OPPORTUNITIES, PROSPECTS FOR COOPERATION BETWEEN THE TWO COUNTRIES.

Vietnam Supports Australian Enterprises Investing and Setting-up Business in Vietnam

The dialogue of Prime Minister Nguyen Tan Dung has attracted the participation of hundreds of large enterprises of Vietnam and Australia in the areas of banking, finance, energy, oil and gas, mining.  Prime Minister Nguyen Tan Dung has directly answered many questions of the businesses, Australian investors relating to prospects, opportunities to promote and enhance the intrinsic comprehensive partnership between Vietnam and Australia.

Prime Minister Nguyen Tan Dung has generalized the development of Vietnam’s economy from an underdeveloped country with a closed economy and until now Vietnam has become a middle-income country with a dynamic economy, enter into the regional economy and the world’s.

Vietnam achieved GDP growth of nearly 6% in 2014. Until now, registered aboard direct investment capital is up to nearly $ 300 billion, with nearly 18,000 projects from more than 100 countries and territories. Currently, there are over 100 leading corporations investing and set-up business venture in Vietnam.

The Prime Minister stressed: “To attract more powerful, more efficient foreign investment, the Government of Vietnam will continue to fulfill its smooth operation and economic institutions in Vietnam market, compete equally between domestic firms and foreign firms as committed international integration of Vietnam.

Vietnam confirms continuing international economic integration deeper through the full implementation of its commitments in the WTO and bilateral free trade agreements as well as other multilateral ones. Currently we are implementing 8 free trade agreements and negotiations and will continue to expand the market, open market with other free trade agreements, especially the new generation FTA with high requirements to create competitive business environment in the ASEAN region and create a legal framework consistent with international business practice in the market of Vietnam … “

Prime Minister Nguyen Tan Dung also said that Vietnam is focusing on the three breakthrough strategies to facilitate the attraction of investment and development, business and promote economic development, which is perfect institutional market economy as well as investment in infrastructure development and training human resources, especially human resources quality.

Vietnam also continues to ensure political and social stability and protects the legitimate rights and legality of investors, including domestic and foreign; and continue to improve the rule of law, ensure and promote strong democratic liberties of the people, both economically and politically.

Prime Minister Nguyen Tan Dung has listened and directly answered many of the questions of businesses, Australian investors relating to prospects, opportunities to promote and strengthen comprehensive partnerships between Vietnam and Australia especially to promote cooperation in the field of competitive advantage, such as mining, energy, chemicals, agriculture, finance, banking, education and high quality services.

Government of Vietnam also supports Australian businesses involved in the process of restructuring the economy of Vietnam, especially in the strong field of Australia such as energy, telecommunications infrastructure, education – training, agricultural business and finance.

If you wish to explore investment opportunities in Danang, or set-up company, business in Ho Chi Minh City in particular or in Hanoi or in Vietnam in general, please contact us via email ant@antconsult.vn or call our office number: +848 35202779 (HCMC) or +844 39388751 (Hanoi).

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