JCCI Helps Vietnam Develop Supporting Industries

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On the occasion of celebrating the 40th founding anniversary of Vietnam – Japan diplomatic relations, a business delegation affiliated to the Japan Chamber of Commerce and Industry (JCCI), led by Mr Kohei Watanabe, President of Mekong – Japan Economic Cooperation Committee, paid a visit to Vietnam and met with the Ministry of Planning and Investment (MPI). On this occasion, JCCI and MPI held the first joint meeting. This visit not only deepened the friendly diplomatic relations between the two countries but also provided a chance for the two sides to understand, support and open up opportunities in supporting industry development.

Mr Kohei Watanabe said Vietnam and Japan are having great opportunities for comprehensive cooperation in various fields. Particularly, Japanese firms presently tend to redirect their investment flows to new countries and Vietnam is a potential destination. This is a very important premise for the two sides to build up economic, cultural and commercial relations to bring practical benefits to both countries. Regarding the legal framework, the two countries have the Vietnam – Japan Joint Initiative Cooperation Programme – a stepping stone for Japanese companies to achieve more investment opportunities in Vietnam in prioritised fields like trade, electronics, software, finance – banking, communications, manufacturing, parts production, mining, construction, transport and industry among others.

Mr Bui Quang Vinh, Minister of Planning and Investment, said MPI signed a memorandum of understanding on investment promotion with JCCI over a year ago. JCCI is a big economic organisation with up to 1.3 million members, accounting for one third of small and medium enterprises (SMEs) in Japan. In addition, to accelerate investment, economic and trade cooperation with ASEAN countries in the Greater Mekong Sub-region in general and Vietnam in particular, in April 2013, the Mekong – Japan Economic Cooperation Committee was set up with nearly 200 initial member companies, which were chosen and expected to make investment in this region in the future.

Mr Do Nhat Hoang, Director of Foreign Investment Agency (FIA) under MPI, said Japan is now the biggest official development assistance (ODA) donor to Vietnam and the biggest foreign investor in the country. Japan has so far invested over US$33 billion in Vietnam, including nearly US$4.9 billion in the first 10 months of 2013, of which processing industries drew 96 percent. Japan’s investment capital accounted for 25 percent of total foreign investment capital in Vietnam in the 10-month period. Vietnam highly appreciates the potential and quality of Japanese investment projects and looks forward to welcoming not only big companies but also SMEs of Japan to expand investment in Vietnam.

He also informed Japan of Vietnam’s industrialisation strategy in the framework of Vietnam – Japan cooperation until 2020, with a vision to 2030, which places priorities on six strategic industries to promote technological innovation, raise labour productivity and build international competitiveness: Electronics, agricultural machinery, agricultural and aquatic product processing, shipbuilding, environment and energy conservation, and automobile and parts production.

Ms Nguyen Thi Xuan Thuy, Director of Integration Strategy and Policy Department under the Institute for Industrial Policy and Strategy, the Ministry of Industry and Trade, said, Vietnam now has more than 300 automotive companies. Before 2007, automobile sales had a stable growth rate. In the period from 2007 to 2009, the growth of Vietnamese automobile industry slowed down on economic downturn. In the first 10 months of 2013, auto sales began to show signs of positive recovery. Trucks and sedans with less than five seats were the best-sellers. Toyota Motors and Truong Hai Auto were the two largest carmakers in Vietnam.

She said the Ministry of Industry and Trade is reviewing special consumption tax, also known as excise tax, on locally made automobiles, import tariffs, regulations on localisation rate, and human resource development to carry out Vietnam’s industrialisation strategy in the framework of Vietnam – Japan cooperation until 2020, with a vision towards 2030.

Representatives of Japanese companies also introduced their companies and proposed support measures when they do business in Vietnam. Their proposals are mainly centred on production process, policy priority for investment expansion and reinvestment, policy on export processing companies when they sell products to Vietnam to raise the localisation rate, particularly automobile, and shortened tax refund duration (in spite of being already reduced from 60 days to 40 days.

Ms Mitshuhiko Iino, President of Toyo Drilube Co., Ltd, put forth specific suggestions on policies restriction and prohibition of old machinery importation. He said Drilube Toyo’s old machines are still in good working conditions and the company wants to bring them to Vietnam. If Vietnam restricts or bans old machinery and equipment import, this will affect the company’s business investment in Vietnam. Hence, the company expects Vietnam will revise regulations to this effect, at least for certain cases.

Mr Naoki Sugiura of Panasonic Vietnam Co., Ltd said that ASEAN will become the centre for economic expansion and the industrial growth of countries with high competitiveness will be enhanced as soon as tariff barriers are abolished. He added that Vietnam has not been able to establish a competitively advantageous business environment for electric and electronics industries. In reality, each administrative branch has its own regulations and tends to increase permits and complicate administrative procedures. He noted that to benefit from trade liberalisation and economic development, Vietnam should review its legal system to eradicate contradictory and unnecessary contents and simplify administrative procedures.

Mr Do Nhat Hoang said the Ministry of Planning and Investment of Vietnam will collaborate with the Japanese side at the earliest to seek solutions to existing shortcomings like administrative procedures, old machinery and equipment import policy, and e-customs application.

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