"The visit to Vietnam by Japanese Prime Minister Suga was more successful than expected," Nguyen Quoc Cuong, a former Vietnamese ambassador to Japan, said.

"This will be a timely boost and an important milestone in the bilateral relationship."

The success is reflected in the two countries' agreement to deepen their extensive strategic partnership, and they have signed many important agreements to restore and step up cooperation in all fields, he said.

Yoshihide Suga wrapped up a three-day official visit to Vietnam and left for Indonesia on Tuesday morning.

In Hanoi, he met with Party General Secretary and President Nguyen Phu Trong, National Assembly Chairwoman Nguyen Thi Kim Ngan and Prime Minister Nguyen Xuan Phuc.

Cuong said more and more Japanese businesses are interested in diversifying their production chains to Vietnam and the rest of Southeast Asia.

Japanese companies in Vietnam are "excited" about the agreements that the two sides signed during PM Suga's visit, he said.

So business activities would be accelerated, he added.

Stephen Nagy, senior associate professor in the department of politics and international studies, International Christian University, Tokyo, concurred, saying Japanese investment in Vietnam would increase in future.

Japan announced plans to shift supply chains out of China in April, and earmarked a 243.5-billion-yen ($2.3-billion) stimulus package to help its companies move out.

"While neither is overtly part of a decoupling from China, it should be understood as a diversification of supply chains throughout Southeast Asia and South Asia over the long term to reduce Japan’s global export manufacturing from another endogenous shock" when China dominates global supply chains, Nagy said.

"While diversification is indeed critical, Japanese businesses are not in a process of exodus from China. Rather, they are concentrating their manufacturing in China for Chinese by Chinese with Japanese technology."

He said Japan might see Vietnam as an attractive destination since it is now a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and signed the EU-Vietnam Free Trade Agreement.

Besides, Japan sees a strong Vietnam as a force to foster intra-ASEAN economic integration, he said.

"The deeper intra ASEAN integration is the more it can function independently of China and maintain its strategic autonomy."

During their meeting on Monday Suga and Phuc pledged to deepen the bilateral relationship, restore and continue cooperation in various fields and agreed to enhance political trust and cooperation in security and defense.

They also agreed to work together in areas affected by the Covid-19 pandemic.

The two sides signed 12 agreements to boost economic, environmental, public infrastructure, healthcare, agricultural, and energy ties.

Christina Davis, professor of government and director of the program on U.S.-Japan Relations at Harvard University in the U.S., said Japanese companies could be expected to build new factories and expand supply lines in Vietnam following statements made by Suga during his visit.

The diversification of supply chains by Japanese companies in Vietnam would be across industries like electronics, machine tools and textiles and there would be a focus on PPE during the pandemic, she said.

Suga said Japan wants to strengthen its links with the region in terms of both hard infrastructure like roads, bridges, tunnels, railways, and ports and soft infrastructure to meet the economic, healthcare, and cultural and social needs of people.

Japan would particularly like to invest in the supply chain in Southeast Asia, he said.

The pandemic has shown how supply chains could be broken and why it is necessary to build stable chains and improve their stability to prevent them from being broken.

"Many Japanese companies are striving to diversify supply chains by extending them to Southeast Asia. Japan will further strengthen cooperation with Southeast Asia to increase the resilience of supply chains and build economies in Asia that are resilient to crises."

The Japan External Trade Organization (Jetro) had said in July that 15 Japanese firms had registered to shift their production from China to Vietnam. They are among 30 firms the Japanese government will fund to move factories out of China and to Southeast Asian countries like Vietnam, the Philippines, Thailand, and Laos.

Both Nagy and Davis also said they expected Japan to continue to increase its official development assistance (ODA) to Vietnam.

Davis said one could expect Japan to help Vietnam build infrastructure including roads and ports infrastructure.

Japan is Vietnam’s biggest provider of ODA, having extended aid worth almost $24 billion as of the end of last year, or more than 26 percent of Vietnam’s total foreign loans.

Defense cooperation

Another benefit expected from the visit is diplomatic coordination to protect freedom of navigation in multilateral forums.

Davis said: "Japan and Vietnam will coordinate in their strong front against China's excursions in the South China Sea. I imagine that one could see statements by the ASEAN Regional Forum and Asia-Pacific Economic Cooperation (APEC) leaders that will express strong support for rule of law and opposition to militarization of the sea."

Vietnam calls the South China Sea the East Sea.

Nagy said the visit indicates "Japan’s commitment to strengthening the capacities of Vietnam and other states to monitor their maritime environment so they can better defend against assertive behavior by China."

During his meeting with university students on Monday, Suga said the ASEAN Outlook on the Indo-Pacific (AOIP) released last year shares many fundamental commonalities with the "Free and Open Indo-Pacific" Japan is advocating, and "that fact is tremendously encouraging" for him.

He also said many developments in the East Sea have gone against values espoused by the AOIP.

"Japan is strongly opposed to any actions that escalate tensions in the [East] Sea. Japan has been consistently supporting the preservation of the rule of law in seas. I would like to reemphasize the importance for all parties concerning the [East] Sea issues to work toward the peaceful resolution of disputes based on international law instead of resorting to force or coercion," the PM said.

Davis said Japan and Vietnam might be working toward having Japan sell defense equipment to Vietnam.

Suga’s spokesman, Yoshida Tomoyuki, told reporters in Hanoi that Vietnam and Japan are negotiating for the transfer of defense equipment and technology.

Tokyo wants to ensure that this transfer contributes to the overall peace and stability of the region, and the items would be chosen by Vietnam, he said.

Nagy said defense cooperation between Vietnam and Japan would likely focus on maritime domain awareness capabilities, search and rescue, coast guard-related capabilities, and Japan’s support for non-traditional security issues in the South China Sea such as piracy, illegal fishing and climate change.

Besides the direct opportunities it might provide to boost bilateral ties, Cuong said Suga’s visit has also improved Vietnam’s status on the world stage.

Suga said: "Japan, as an Indo-Pacific nation, will continue to contribute to the peace and stability in this region. I chose Vietnam because it is the most suitable destination from which to send this message to the world. PM Nguyen Xuan Phuc and I have exchanged many ideas on bilateral relations and coping with Covid-19."

Cuong said Suga's statement could bring more world leaders to Vietnam to promote cooperation at a time when the world is still reeling from the impacts of Covid-19.