Vietnam - Japan economy: Half a century of working side by side

Workers producing air conditioners at the Daikin factory in Vietnam (Internet source).

In September 9, Vietnam and Japan began to establish relations. Japan then implemented foreign policy according to the Fukuda doctrine - the policy that Japan plays a bridging role, contributing to maintaining peace and stability in Southeast Asia, among which, Vietnam plays an important role.

In 1993, Vietnamese Prime Minister Vo Van Kiet visited Japan, marking the first official visit of the Vietnamese Government.

One year later, Mr. Murayama Tomiichi became the first Japanese Prime Minister to visit Vietnam since the establishment of diplomatic relations.

Leaders of the two countries also continuously visit and meet. Japanese Prime Ministers have visited Vietnam 12 times. In contrast, generations of Vietnamese General Secretaries visited Japan four times (the first time was in 4, when Japan was the first G1995 country to welcome the Vietnamese General Secretary). Presidents of the country visited Japan 3 times, Prime Ministers 21 times, and Presidents of the National Assembly 4 times.

Mr. Abe Shinzo alone had four official visits to Vietnam. Former Ambassador Nguyen Quoc Cuong, who served a three-year term under the late Prime Minister, assessed Mr. Abe as a positive contributor and made many exceptions for Vietnam. Except for America, Vietnam is probably the country he has visited the most.

The close relationship between senior leaders is continuously maintained and transformed into action.

Among bilateral donors to Vietnam from 1995 to present, Japan has always been the largest ODA partner. By the end of this year, the prospect of loan value in yen could exceed 100 billion yen for the first time since fiscal 2017.

Those capital flows have taken shape through 3.300 km of built roads (equivalent to 70% of high standard two-lane roads in Vietnam), power plants with a total capacity of 4.500 MW (about 10% of national electricity output). ), or symbolic works such as Nhat Tan bridge, Binh Hung wastewater treatment plant, Metro railway line No. 1...

In addition to "hardware" in infrastructure construction, ODA capital also supports "software" such as human resource development; building institutions and legal policies. When Covid-19 broke out, Japan was the first country to donate vaccines to Vietnam.

Japan's footprint is not only reflected in ODA but also in FDI investment capital flows. By September 20, Japan's FDI into Vietnam reached 9 billion USD, ranking third out of 71,3 countries and territories investing in Vietnam, according to the Foreign Investment Agency.

One of the businesses that set foot in Vietnam very early was Acecook. In 1993, they brought two promises: developing Vietnam's processed food industry and exporting products that bring Vietnamese culture to the world.

Acecook currently owns 11 factories and 6 branches in Vietnam, creating jobs for more than 6.000 workers. The enterprise also supplies more than 3 billion products to the export and domestic markets each year.

After the first businesses coming to Vietnam such as Acecook, in 2008, Japanese capital accelerated into Vietnam. In December 12, Vietnam - Signed the Bilateral Economic Partnership Agreement (VJEPA), also Vietnam's first bilateral FTA, in which the two countries gave more incentives to each other than with the Partnership Agreement. ASEAN-Japan comprehensive economic cooperation.

Regarding trade, because goods are complementary and not directly competitive, Japan is considered a potential export market. Vietnam mainly exports seafood, crude oil, textiles, electric wires, electric cables, wood and wood products, computers and components, coal, and footwear.

During this year's Vietnamese Goods Week, supermarkets of giant AEON in Japan appeared Southern products such as longan, mango, durian, and nipa honey. Many years ago, Northern products also appeared on Japanese supermarket shelves. AEON Japan Deputy General Director Mitsuko Tsuchiya said that Vietnamese fruits are actually highly appreciated by the Japanese market, because most are grown in natural conditions. 10 tons of Long An longan and 200 tons of bananas were exported through this retail chain. During the period 2017-2022, the total export value of Vietnamese products through AEON's retail system to Japan and other countries has reached more than 2 billion USD.

Meanwhile, Vietnam imports from Japan goods serving industrial production such as machinery, equipment, tools and spare parts, electronic products and components, all kinds of iron and steel, and all kinds of fabrics, auto components, plastic raw materials, chemicals, textile and garment raw materials, leather and footwear.

A representative of AEON - a retail giant that considers Vietnam one of the two most important markets - assessed that many Japanese businesses are attracted by the rapid population growth rate, especially the Vietnamese middle class. GDP growth rate is much higher than other Asian countries, including Japan, which is an advantage of Vietnam. AEON has announced that it will continue to open many large shopping centers in the next 3-5 years in Vietnam.

Vietnam's densely populated market not only has great purchasing power but is also a source of abundant labor for Japan. In recent years, this country has faced a serious population aging situation when the proportion of elderly people (65 years and older) accounts for more than 29% - the highest level in the world. This pressure causes many Japanese businesses to expand into countries with large scale and young populations, as well as increase labor imports.

Vietnam's hard-working human resources have made great contributions to their country's economic and social development. Vietnam leads among 15 countries sending interns to work in Japan, according to the Department of Overseas Labor Management. A total of more than 345.000 Vietnamese workers are working and living in Japan in 84 occupations, as of the end of 2022. Currently, the number of Vietnamese workers in Japan accounts for about a quarter of the number of foreign workers in Japan.

Previously, the majority of investment in Japan came from Western developed countries. But according to Chief Representative of the Japan External Trade Organization (JETRO) Hanoi Takeo Nakajima, recently, investment in Japan by Asian companies, including Vietnamese, has been increasing.

Vietnamese businesses investing in Japan mainly in the field of information technology. The most significant investment, according to calculations from JETRO, is from FPT, a company with nearly 15.000 engineers working for Japanese customers; There are 2.900 employees working directly in 16 offices and development centers in Japan.

This unit, which entered the Japanese market in the 2000s, aims to be in the top 20 largest technology service companies in Japan by 2025, with revenue of 1 billion USD by 2027.

In addition to traditional fields, according to him, it is possible to deepen the relationship, and there are new fields that need joint cooperation such as digital transformation, green economy, and combating climate change.