PANO - Billions of US dollars have been injected across different fields in Vietnam annually, by more than 1,500 Japanese enterprises. Now that the Trans-Pacific Partnership (TPP) will soon take effect, it is important to consider whether or not it might cause any pressure on Japanese and Vietnamese businesses or have any effect on Vietnam-Japan partnership?  If so, what?

The above questions were raised and discussed ebulliently at the Vietnam-Japan Economic Forum, jointly organized by the Vietnam Chamber of Commerce and Industry (VCCI) and the Japan External Trade Organization (JETRO) in Hanoi on October 14th under the direction of Deputy Prime Minister Hoang Trung Hai.

The forum gathered representatives from more than 300 businesses from Vietnam and Japan, and from ministries and provinces where Japanese businesses have been investing.

Revitalizing the Vietnam-Japan value chain

In his opening speech, VCCI President Vu Tien Loc stressed the warm and fruitful partnership between the two countries, resulting in the intensive development of the economic ties, especially in key fields.

According to Loc, when the TPP is ratified, it will create a new global supply chain that both Vietnam and Japan are included in. Therefore, what should the two countries’ businesses do and in which fields should they make breakthroughs for their own benefit and to create competitive products in the region and the rest of the world?

The VCCI President also warned of the remaining shortcomings that should be fixed as soon as possible so opportunities are not missed when TPP officially takes effect.

“Japanese businesses are always keen on investing in Vietnam and in turn, Vietnam has created certain priorities for Japanese businesses. Why has a Vietnam-Japan value chain not been formed yet and why has Vietnam’s auxiliary industry not yet developed, despite much attention being paid by both sides?”, Loc queried.

Loc also pointed out that a lot of Japanese and Vietnamese businesses have failed to obtain cooperation opportunities, share technologies and bring benefits to each other though in fact they really want to. The responsibility for this failure rests on the consulting and legal assistance companies and banks.

Deputy Prime Minister Hoang Trung Hai (C) in a joint photo with delegates at the forum

Reform is needed to take advantage of partners

Currently, as many as 1,500 Japanese businesses with technological and capital advantages and long-lasting experience in bio-technology, agriculture, automobile manufacturing, information technology, human resource training, and auxiliary industry have invested in Vietnam. However, much of the potential of Japanese businesses have not yet been tapped by the Vietnamese side. Such businesses wish to see more changes in Vietnam, such as more speed and transparency in the reform of administrative procedures, said Yuri Sato, JETRO’s Vice President, regarding the cooperation between the two countries’ businesses.

At the forum, the two sides frankly disclosed shortcomings in fields such as auxiliary industry, investment in bio-technology, agricultural modernization and human resources training, which is considered soft infrastructure. In the auxiliary industry, they agreed that it has not yet developed as expected, resulting in the import of auxiliary products from other countries and lowering the localization rate while no big cooperation between the two countries’ businesses has been seen in human resources training to standardize the system of high-quality workers and qualified managers.

Emphasizing that many Japanese businesses registered to have fact-finding trips in Vietnam to seek investment cooperation, Kaishii Yukihito, a leader from the Japan Business Federation (Keidanren) in Vietnam, held that the biggest concern for Japanese businesses is the administrative procedures.

For Professor Kenichi Kawasaki from the institute for international policy studies, the localization rate should be raised in all products and the production cost should be reduced to minimum levels. Additionally, the infrastructure development in electricity, fresh water and transport should meet regional standards first and global standards in the future.

Meanwhile, Ms. Yuri Sato said that to exist, businesses must renovate themselves to move forwards when TPP is officially operational. She took an example that Vietnam’s textile and garment sector has obtained big turnover; however, Vietnam has not produced supportive products, leading to low added value. Ms. Yuri Sato noted that Japanese businesses have potential in supportive production and wish to boost cooperation with Vietnamese ones.

Choosing key fields to give priority to

At the forum, Envoy of the Japanese Embassy in Vietnam Katsuro Nagai said that fields to be prioritized should be made clear, so that resources could be poured into them with an aim of developing and making them competitive in comparison with similar fields of other countries.

Sharing her view with the envoy, Ms. Yuri Sato held that Vietnam integrated in the market-oriented economy later than other countries in the region; so, Vietnam must speed up. Vietnam needs to have stronger policies and spend suitable resources in developing high-quality human resources as well as clearly specify the key fields to be prioritized for development.

Mr. Katsuro Nagai mentioned automobile production in 2018. He raised a question about what Vietnam will do to win over its competitors in the field when the tax in ASEAN will be adjusted while there remains low localization rate and underdeveloped auxiliary industry.

Having listened to the constructive opinions from both sides, Deputy Prime Minister Hoang Trung Hai concluded that the region and the world will see rapid and professional economic development as well as fiercer competitiveness in the time to come. Hai stressed that Vietnam is targeting sustainable and green development; therefore, high technologies in all fields are required on the basis of synchronous and modern infrastructure. To do that, Vietnam wishes to cooperate with and receive shares from Japanese businesses.

“The Government of Vietnam always listens to recommendations from the two sides’ businesses and creates conditions for Japanese businesses to seek long-term investment opportunities in Vietnam. Vietnam gives priority to developing six spearheaded industries, including electronics, agricultural machines, agricultural and aqua-products process, shipbuilding, environment and energy saving, automobile and spare parts production”, said the Deputy Prime Minister.

According to statistics from the Foreign Investment Agency under the Ministry of Planning and Investment, until April 2015, Japan has had 2,619 valid projects with the investment of US$ 37.5 billion, ranking the second among countries and territories with investment in Vietnam.

Reported by Nguyen Hoa

Translated by Mai Huong