Both Vietnam and Japan are establishing closer ties because of China. Vietnam is receiving more capital from Japan and less from China, and many Japanese businesses are leaving China for Vietnam.

 

JETRO has released a report showing that 30 percent of Japanese enterprises considering outward investment are eyeing Vietnam as the first choice.

Another report released in February 2014 showed that Vietnam has become the top priority for Japanese investors. It ranks above the most formidable competitors – Indonesia, Thailand and the Philippines – in attractiveness to Japanese investors.

Meanwhile, 70 percent of Japanese investors in the country said they are considering expanding their operation scale in Vietnam this year.

The Wall Street Journal reported that while Vietnam was hesitant to receive capital flow from China, Japan has been trying to tighten diplomatic relations with Hanoi. 

The newspaper commented that both Beijing and Tokyo have been pouring investment capital and financial aid into Vietnam with an aim to build up low-cost production bases here.

However, the escalating tension in the Vietnam-China relationship has helped Vietnam find ways to escape reliance on China’s investment and aid.

Deputy Minister of Industry and Trade Do Thang Hai confirmed in the newspaper that the political problems in relation with China have forced Vietnam to diversify  investment sources.

Japan has been trying to reinforce its investments in Vietnam.

In recent years, Tokyo has been providing more aid to Vietnam than any other country. In 2014, it poured $1.8 billion into a highway project and new terminal at Noi Bai Airport in Hanoi

In 2014, analysts thought that Chinese would get the contract to build 688 MW Duyen Hai 3 thermal power plant. However, finally, the contract was signed with Japanese Sumitomo company.

Koyama Kduji from the Tokyo Chamber of Commerce and Industry (TCCI), who led a group of businessmen in a working visit to Ha Nam province, said the eight businesses plan to make investments in Vietnam, which they see as the most important investment destination in South East Asia.

According to the Foreign Investment Agency, Japanese registered 81 investment projects in the first three months of the year, capitalized at $295 million in total, an increase of 13 projects and decrease of 30 percent in investment capital.

With the decrease, Japan has fallen from the second position on the list of foreign investors in Vietnam. 

However, FIA’s deputy director Dang Xuan Quang said there was no need to worry about the decrease. The Japanese yen depreciation and new policies have given Japanese investors opportunities in their home market. However, in the long term, Japanese will continue making investments outside Japan.

Kim Chi