Japanese Investment into Ho Chi Minh City on the Rise

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HCMC – Ho Chi Minh City (HCMC) has been seeing a large increase in foreign direct investment (FDI) in 2014. In the first two months of this year, the city has seen a dramatic increase of 226.1 percent in the FDI that has flowed into the economic center of the country.

HCMC has been working hard to attract FDI and is in the process of implementing a number of reforms intended to smooth the investment process, such as making it much easier for a foreign company to be granted an Investment License.

Professional Service_CB icons_2015RELATED: Dezan Shira & Associates’ Business Advisory Services

The large growth in investment is a direct result of the massive influx of Japanese companies and money into Vietnam.

A large part of the reason for foreign investors’ current enthusiasm in Vietnam can be attributed to the forthcoming signing of the Trans-Pacific Partnership.

RELATED: Vietnam Releases New FDI Statistics

In 2013, Japan led the list of foreign investment with a total of US$5.74 billion in newly registered capital. The country was followed, in numerical order, by Singapore, South Korea, China, Russia, Hong Kong and Taiwan.

The Southern economic provinces of Vietnam are particularly attractive to the Japanese who are increasing their investments throughout the area.

The Ho Chi Minh City Export Processing and Industrial Zones Authority (HEPZA) expects that it will attract an estimated US$550 million in 2014; this represents an increase of 10 percent year-on-year.

RELATED: Vietnam Issues Revised Law to Improve Local Investment Climate

Key Japanese investors who have recently increased their investment capital into the HEPZA area include:

  • Sai Gon Precision Co, Ltd. with an increase of US$129 million;
  • Tosok Co, Ltd. with an increase of US$95 million;
  • Nidec Tosok, Akiba Co, Ltd. with an increase of US$ 10 million; and
  • Juki Co, Ltd with an increase of US$12 million.

According to a report issued by the Japan External Trade Organization, out of the 435 Japanese companies currently invested in Vietnam, 70 percent plan to expand their operations within the country.

Among the country’s key attractions for Japanese companies are Vietnam’s:

  • Growth capacity;
  • Market size; and
  • Political stability.

In order to increase the flow of FDI into HCMC, HEPZA has announced that it has allocated an additional 408 hectares of land for new Export Processing Zones (EPZ) and Industrial Parks (IPs) as well as 67,400 square meters of workshop space in IPs such as Dong Nam, Tan Phu Trung, Hiep Phuc, An Ha and the Tan Thuan EPZ.

RELATED: FDI Inflows Soar in Vietnam

Additionally, in order to continue building Vietnam’s hi-tech support industry, the Vietnam-Japan Techno Park in Hiep Phuoc IP is aiming to attract investment from Japan’s small and medium-sized enterprises who work in the hi-tech fields.

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam in addition to alliances in Indonesia, Malaysia, Philippines and Thailand as well as liaison offices in Italy and the United States.

For further details or to contact the firm, please email vietnam@dezshira.com, visit www.dezshira.com, or download our brochure.

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