Hanoi (VNS/VNA) -Services and retail are forecast to attract a large amount of Japanese directinvestment into Vietnam this year.

Takeo Nakajima, Chief Representative of the Japan Trade Promotion Organization(Jetro) said “As the consumption power of the Vietnamese increases across thecountry, more Japanese retail and service enterprises find opportunities in thegrowing markets.”

He said there has also been an increase in FDI inflows from Japan intonon-manufacturing activities to serve the Vietnamese market, with thefootprints of two retail giants as Aeon and Uniqlo.

He expected this trend to continue.

Nakajima said though Japanese registered investment decreased last year, thenumber of new projects by Japanese investors increased compared to previousyears.

He said: “The number of licensed Japanese projects reached its highest ever, at435 projects last year.”
The latest survey from Jetrosaid 63.9 percent of Japanese enterprises in Vietnam intended to expand theirbusiness in the country, the highest rate of investment among the ASEAN region.

Nakajima said as most of Japan's large manufacturing corporations had alreadymoved into Vietnam, the additional FDI inflows would be composed from theirextended projects, forecasting that Japanese capital would increase thanks tonon-manufacturing investment and from small and medium enterprises.

At the same time, TetsuoKonaka, chief representative of Japan International Cooperation Agency (JICA),told local media that Thailand was a more attractive market for Japaneseinvestors and enterprises three years ago, but the trend had changed now asmany Japanese investors had shifted their investments to Vietnam.

Konaka thought the investment trend in Vietnam would continue over the next fewyears, not only focusing on manufacturing, but the whole service area of thecountry.

Konaka said "Vietnam has a large market with more than 96 million people,so its service sector has huge potential," and said it was the reason whyretailers like Uniqlo, Aeon and many other famous Japanese corporations enteredthe market.

"Japanese retailers have poured investment in Vietnam because the localmiddle class is growing rapidly and they are able to afford qualityproducts," he said.

Besides retail and services, Takeo Nakajima also thought the investment wouldbe also flowing strongly into other fields.

He said that: “Hotels, health care, IT service, transportation, HR, andeducation have room to grow.”

Jetro’s representative also said: “The rate of local procurement in Vietnam byJapanese manufacturers is 36.3 percent, which is far below the number in Chinawith 69.5 percent.”

So he thought: “The Japanese SMEs will have more business opportunities.”

Do Nhat Hoang, Director of Foreign Investment Department, Ministry of Planningand Investment said that Japanese enterprises often took careful steps ininvestment. Last year, Japanese FDI with 1.07 billion USD ranked second afterthe Republic of Korea with 1.58 billion USD./.