Japanese firms in Việt Nam hit 15-year profit high

Japanese firms in Việt Nam hit 15-year profit high

JETRO’s 2025 Survey on the Business Conditions of Japanese Companies Investing Overseas shows that 67.5 per cent of Japanese firms in Việt Nam expect to be profitable this year, up 3.4 percentage points from 2024 and the highest level since 2009.

In the manufacturing sector, the profitability ratio reached 74.1 per cent, up 3.9 points, while the loss-making ratio dropped sharply to 13 per cent, according to JETRO. — VNA/VNS Photo

Japanese companies operating in Việt Nam last year posted their highest profit outlook in 15 years, reflecting strong business momentum despite persistent barriers related to institutions, administrative procedures, and human resources, according to a survey released on Monday by the Japan External Trade Organisation (JETRO).

JETRO’s 2025 Survey on the Business Conditions of Japanese Companies Investing Overseas shows that 67.5 per cent of Japanese firms in Việt Nam expect to be profitable this year, up 3.4 percentage points from 2024 and the highest level since 2009.

Notably, this is the first time in five years that Việt Nam has outperformed the ASEAN average of 65.3 per cent. Meanwhile, the proportion of firms forecasting losses fell to 17.6 per cent, down 1.7 points year on year, marking a second consecutive year of improvement.

In the manufacturing sector, the profitability ratio reached 74.1 per cent, up 3.9 points, while the loss-making ratio dropped sharply to 13 per cent. Significant gains, exceeding 15 percentage points were recorded in industries such as paper, wood products and printing; electrical and electronic components; and iron, steel and non-ferrous metals.

In the non-manufacturing sector, 61.2 per cent of firms reported profits, up 3.3 points, although the loss-making ratio edged up to 22 per cent. Real estate leasing, education and healthcare saw profit improvements of more than 20 points, while transport equipment, mining, energy, tourism, entertainment, retail and food services continued to post profitability rates below 50 per cent.

JETRO attributed the manufacturing rebound mainly to stronger export demand, while growth in domestic demand was the key driver for non-manufacturing firms. However, intensifying competition and rising labor costs remain major risks.

Looking ahead to this year, 47.6 per cent of surveyed firms expect improved profits, though more than 30 per cent of transport equipment and parts manufacturers anticipate a deterioration in performance. Over the next one to two years, 56.9 per cent of Japanese firms in Việt Nam plan to expand operations, an increase of 0.8 points year on year, keeping Việt Nam at the top of ASEAN for expansion intentions for the second consecutive year. Only 4.2 per cent expect to scale down, and just 0.7 per cent consider relocation or withdrawal.

Regarding US reciprocal tariffs, 35 per cent of Japanese firms in Việt Nam export to the US, higher than the ASEAN average. About one-third of these exporters foresee significant negative impacts, mainly due to weaker US demand, though many are responding by cutting costs, renegotiating prices and diversifying markets.

Việt Nam’s key investment advantages continue to be market size and growth potential (68.4 per cent), low labour costs (55.2 per cent) and political and social stability (53.2 per cent), all above ASEAN averages. Conversely, complex administrative procedures remain the top concern, cited by 67.5 per cent of firms, alongside legal transparency issues and rising labor costs.

Japanese investment in Việt Nam last year was estimated at around US$3 billion, up 19.5 per cent from 2024, with growing interest in digital transformation and high-tech sectors. JETRO emphasised that while Việt Nam remains a leading investment destination in ASEAN, further administrative reform, legal transparency and workforce development are critical to sustaining long-term attractiveness.

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