Japan, Vietnam lay out action plan to boost FDI
Japan, Vietnam lay out action plan to boost FDI
Agence France-Presse Hanoi, Vietnam
Japan and Vietnam signed into force on Thursday a bilateral action plan aimed at boosting flagging Japanese investment in the communist nation.
The Japan-Vietnam Joint Initiative was sanctioned in April this year during talks in Tokyo between Japanese Prime Minister Junichiro Koizumi and his Vietnamese counterpart Phan Van Khai.
"This Joint Initiative shows that mutual co-operation in the economic field between Vietnam and Japan is developing on a daily basis," Vietnamese Minister of Planning and Investment Vo Hong Phuc told reporters.
The action plan focuses on 44 topics, including improving tax incentives, waiving short-stay visas for Japanese nationals, enforcing intellectual property rights, and increasing government transparency.
The two countries, however, have yet to agree on measures to tackle Japanese concerns over Hanoi's attempts to protect its domestic car and motorcycle industries.
"Compared with other ASEAN countries, the amount of Japanese FDI (foreign direct investment) in Vietnam is still very low," the drafters of the joint action plan said in a report, adding Vietnam was losing potential Japanese FDI to its neighbours.
The report's finding echoed comments made in July by Yoshihiko Sumi, head of the trade policy department at Japan's Ministry of Trade and Economy, who said Hanoi needed to make substantial improvements to its investment environment.
"There was a time when Japan's investment into Vietnam reached more than US$1 billion in a year. However, last year, Japanese investors only invested around $100 million in Vietnam," he said.
Japan, which is Vietnam's biggest aid donor, is also the third largest investor in the country, with cumulative pledged investment of $4.47 billion, $3.89 billion of which has been disbursed.
Last month the two countries signed a bilateral investment protection agreement guaranteeing Japanese investors most- favored-nation status and access to Vietnam's tightly controlled markets.
Negotiations between Tokyo and Hanoi on the reciprocal pact began in May 2002 but were knocked off course after Vietnam slashed import quotas for motorcycle parts four months later in September that year.
This sudden policy announcement triggered a heated two-month dispute and forced Japanese manufacturers Honda and Yamaha to temporarily suspend their Vietnam operations.
Alarm bells were set off again in Tokyo earlier this year after Hanoi announced a series of planned tax hikes aimed at encouraging Vietnam-based foreign-invested vehicle manufacturers to increase their local content ratios.