The inflow of foreign direct investment (FDI) into the nation will recover once the COVID-19 epidemic is successfully brought under control, according to Takeo Nakajima, chief representative of Japan External Trade Organization (JETRO) in Hanoi. 

FDI inflows into Vietnam will bounce back after COVID-19, according to JETRO

Upon addressing the Vietnam-Japan Investment Connection teleconference on September 9, Nakajima explained that FDI inflows into the country up until 2019 were consistently increasing, with several foreign businesses, including Japanese enterprises, increasing their level investment. 

Despite FDI inflows into the nation since the beginning of the year slowing down due to the negative impact of the COVID-19 epidemic, FDI capital is anticipated to rebound as the world moves past the COVID-19 pandemic, stated Nakajima.

Most notably, Nakajima attributes the slowdown in FDI inflow from Japan to obstacles faced by Japanese enterprises caused by the impact of the COVID-19 epidemic. 

According to a survey conducted by JETRO, up to 65% of firms said that their revenue has endured a significant drop as a result of the epidemic, while Japanese businesses are also hesitant about returning to the country after the resurgence of COVID-19 epidemic in late July. 

Statistics show that only 5% of Japanese enterprises in Vietnam have witnessed their revenue decrease by over 50%, which is regarded as a low figure when compared to other countries.

The recovery of FDI inflows can largely be attributed to the Vietnamese Government’s policies which aim to create optimal conditions for foreign enterprises, including Japanese firms. 

Furthermore, the country has joined several free trade agreements and economic partnerships with several enterprises to gradually increase participation in global supply chains, Nakajima noted. 

The International Monetary Fund projected that only Vietnam among Southeast Asian countries will enjoy robust growth this year, thereby creating a bright spot amid a gloomy picture for the economic prospects of the entire region.

Masataka Fujita, secretary general of the ASEAN-Japan Centre (AJC), underlined the need to strengthen co-operation between both countries in order to overcome the hindrances caused by the pandemic, adding that the teleconference provides an ideal venue for businesses to enhance trade linkages and seek suitable partners.

Following this, Vu Ba Phu, director of the Vietnam Trade Promotion Agency, affirmed that 47 years on since first establishing diplomatic ties, Japan remains an important investment partner. 

Recent years has seen the wave of Japanese investment continuously increase, with the Far East nation taking the lead with US$8.59 billion of investment, accounting for 24.2% of the total investment capital of 112 countries and territories investing in the country in 2018. 

Last year saw Japan rank second in FDI attraction with a total registered capital of US$59.3 billion, accounting for 16.7%.

Phu therefore emphasised that FDI attraction from Japan, along with drastic measures aimed at stepping up technology transfer, will greatly help to improve the country’s technology level and production capacity, contributing to turning the country into an industrialised and modern economy.