Japan keeping eye on global trade situation
Japan keeping eye on global trade situation
Japanese companies are plotting expansion strategies in Vietnam as the backdrop of tariff uncertainty may take its toll on foreign direct investment flows.
Japanese investors are assisting in cost optimisation, boosting green transition, and supplying products, photo Le Toan |
In late December, Japan’s Marubeni Corporation commenced a demonstration of its 3.7MWh battery energy storage system (BESS). The initiative follows an MoU for cooperation with Vietnam, signed between Marubeni and VinES, a subsidiary of Vingroup, last year.
Marubeni will install and operate the BESS at Vinpearl Resort Nha Trang, owned by a Vingroup subsidiary, using a system developed and manufactured by VinFast Auto Ltd. under the VinFast Energy brand, another Vingroup relevant subsidiary.
Satoru Harada, COO of Power Division at Marubeni Corporation, said, “We are delighted to collaborate with Vingroup through the first undertaking at Vinpearl, utilising the BESS manufactured domestically by VinFast Energy. This will also open new business opportunities for Marubeni in the Vietnamese market by providing BESS services to manufacturing and business facilities, helping customers optimise operational costs while driving the green transition through rooftop solar integration as an integrated solution.”
In mid-December, Sojitz Corporation launched its $500 million beef processing plant in the northern province of Vinh Phuc, which is the first of its kind in Vietnam to process refrigerated beef. The new processing plant will be equipped to process approximately 30,000 cattle per year with the aim of increasing production of beef products to approximately 10,000 tonnes per year.
In March, Sojitz plans to start operating a cattle farm near the processing plant, which will be capable of raising 10,000 heads of cattle. The Japanese corporation aims to provide a stable supply of Vietnamese beef products through an integrated system that spans cattle farming to processing and sales.
Specifically, the beef products will be distributed using Sojitz’s four-temperature, cold-chain logistics service in Vietnam with plans to conduct sales to mid- to high-end hotels and restaurants in the customer network of DaiTan Viet JSC, which is Sojitz Group’s largest commercial food wholesaler.
The expansion of Japanese investors takes place amid worries that foreign direct investment may slow due to tariffs. Businesses could be deferring their decisions on concerns that the new US administration will target Vietnam with tariffs, which would diminish the country’s appeal relative to other manufacturing destinations in ASEAN.
Matsumoto Nobuyuki, chief representative of the Japan External Trade Organization (JETRO) in Ho Chi Minh City, said as US trade policy towards Vietnam has not yet been publicly announced, it is difficult to evaluate what impact it may have.
“With regard to the tariffs on China, Canada, and Mexico, it is believed that the three largest exporters into the United States are being targeted. In addition, Vietnam is the third-largest country in terms of trade deficit from the US perspective, so it is likely that the new US administration, which is focused on improving the trade balance, will seek some response from Vietnam. In any case, we will keep a close eye on the situation,” said Nobuyuki.
According to a JETRO survey for fiscal year 2024, over 55 per cent of Japanese businesses doing business in Vietnam plan to expand their operations in the next year or two, the highest ratio in ASEAN. Almost half of manufacturing and processing firms plot expansion in Vietnam, while 63 per cent of firms in non-manufacturing sectors target expansion.
“As the global supply chain is restructured from the perspective of economic security, Vietnam is recognised as a very attractive country for Japanese investors due to its abundant and talented human resources and high economic potential. And many Japanese companies have indicated that they will expand their business in the future due to the recent increase in exports and expansion of the domestic market,” Nobuyuki said.
The survey revealed that the number of firms in the electrical and electronic equipment and transportation industries that will expand increased by more than 20 points on-year. However, Nobuyuki said, continuing risks in the investment environment include complicated administrative procedures, an underdeveloped and opaque legal system, and complicated tax and fiscal procedures.
“Addressing these issues is important for Vietnam to attract investment not only from Japan but also from other countries and to achieve further economic growth in the future, and immediate improvements should be sought,” he said.
