Koji Takimoto, head of the Japan External Trade Organisation (JETRO) in HCM City, said due to Vietnam’s economic stability, many Japanese firms are moving their production to this country from China.

As a result, Japanese investment in Vietnam has been growing steadily.

Last year the East Asian country topped the list of investing countries with a total of US$9.11 billion, or more than a quarter of all FDI that came to Vietnam.

On average, money from Japan flows into around 500 projects in Vietnam every year, most of it being for expansion.

These investments, especially in projects in the mechanical engineering sector, were used to buy machinery and equipment, Takimoto said.

Nakano Precision Company Limited was one such. Nguyen Cong Ly, its deputy director, said the company has been in Vietnam for four years.

Following the construction of a factory at the Tan Binh Industrial Park (in HCM City’s Tan Binh District) last year Nakano had parts manufactured by local companies before assembling and exporting them to its parent company in Japan.

“We will further invest in machinery and equipment because there are signs of growth in the precision engineering, machine tools and metalworking industries,” Ly said.

Earlier this year Sanko Metal Vietnam announced a $2 million investment in its factory at the Nhon Trach IP No 3 in Dong Nai Province.

Promotion of technology transfer

Japanese firms are also collaborating with local companies to transfer technology and machinery and equipment to speed up local production of their products, a JETRO spokesman said.

At the 2017 International Precision Engineering, Machine Tools and Metalworking (MTA) Vietnam, 12 Japanese firms signed business deals with local counterparts.

JETRO expects more such contracts to be signed at the upcoming 2018 MTA exhibition.

A recent survey by JETRO found that for Japanese companies in Viet Nam the rate of use of local products last year was 33.2 per cent compared with 57.1 per cent in Thailand and 68 per cent in China.

It said it would like the rate in Vietnam to rise in the near future.

This rate has an effect on Japanese companies’ effectiveness, Takimoto said.

This is why many of them in supporting industries seek partners in Viet Nam for the transfer of technology, machinery and equipment, he said.

This trend would only strengthen in the coming years, according to the survey.