Many Japanese investors are seeing Vietnam’s supporting industry as an attractive alternative to their domestic suppliers which were badly damaged in the quake disaster in March, a conference heard yesterday.
Speaking at the conference on Japan’s reconstruction efforts held by the Vietnamese Ministry of Planning and Investment and Japan’s Nikkel Economic Times, Japanese Ambassador in Vietnam Yasuaki Tanizaki said the devastating tsunami and earthquake had destroyed nearly all of the production facilities in the eastern region of Japan, which was the main spare part and component supplier for the national manufacturing industry.
Tanizaki said to maintain production and development, Japanese businesses have been seeking an alternative supply of spare parts and components, especially in the Asian market.
Tanizaki cited an online poll by Nikkei Business Publications that said Vietnam is the most attractive destination for Japanese manufacturers, followed by India and Thailand.
However, it would not be easy for Vietnam to make use of this opportunity as the country’s fledging supporting industry may fail to meet Japanese firms’ demand.
Deputy Minister of Industry and Trade Tran Cong Anh admitted certain shortcomings of the local supporting industry such as underdeveloped infrastructure, low-skilled workforce and an inconsistent legal framework.
According to Japan Bank for International Cooperation, said a highly developed workforce and a ready supporting industry are not what Japanese businesses really want from Vietnam. Rather, it is a low-cost workforce and a potential consuming market.
As for Vietnam’s legal issues, Hikaru Oguchi, representative of Japanese law firm Nishimura & Asahi based in Ho Chi Minh City, said the Vietnamese legal system tends to change on a regular basis and there are inconsistencies in law enforcement among local agencies.
She said an unreasonable judiciary system and cultural differences are also major obstacles.