Wednesday, 17 Jan 2018

Japanese investment in Vietnam hits all time high

Updated at Friday, 15 Dec 2017, 21:35
The Hanoitimes - Total Japanese direct investment capital in Vietnam reached 8.94 billion USD in the eleven months of this year, four times higher than last year, according to the Foreign Investment Agency.
The Japanese capital accounted for 27 per cent of Vietnam’s total FDI capital in the period.
It has helped Japanese investors once again exceed Korean rivals to become the first-ranking investor among 126 nations and territories investing in Vietnam within the 11 months of this year.

To further boost the investment in Vietnam, Japanese enterprises have recently raised four problems they face while doing business in Vietnam in a dialogue with the Advisory Council for Administrative Procedure Reform.

The four issues include foreign workers’ compulsory social insurance participation, waste treatment regulations in the draft Law on Environmental Protection, regulations on the import of used machinery and equipment, and the import of automobiles regulated by the Government’s Decree 116/2017/NĐ-CP.
Japanese capital accounted for 27 per cent of Vietnam’s total FDI capital in 11 months.
Japanese capital accounted for 27 per cent of Vietnam’s total FDI capital in 11 months.

Chairman of the Japan Business Association in Vietnam (JBAV) Hiroshi Karashima suggested the Vietnamese Government revise regulations on compulsory social insurance for foreign employees. He called on the Government to allow exemptions for people that have paid compulsory insurance in Japan.

The mandatory insurance participation reduces the attractiveness of the country as an investment destination, the chairman highlighted.
In response to this recommendation, a representative of the Ministry of Labour, Invalids and Social Affairs (MOLISA) said that the payment of social insurance premiums is meant to protect the legitimate rights and interests of workers in Vietnam. Many countries have a similar issue and the common solution is to negotiate bilaterally, the representative said.

Many Japanese firms are concerned of the provision of Circular 23/2015/TT-BKHCN relating to the import of secondhand machinery, saying that restrictions on importing old machinery could hinder large investment flow into Vietnam by Japanese SMEs.

The Japanese business association suggested that machinery and equipment imported for Japanese production activities should not be restricted in terms of the age of the equipment and should not be subject to the import regulations.

Deputy Minister of Science and Technology Pham Quy Duong said that Circular 23 was formulated with the main purpose of limiting the import of old machines to ensure quality and productivity and to avoid the energy waste caused by the use of old machinery. The Ministry of Science and Technology has recognized firms’ difficulties with Circular 23 and made amendments, Duong said.

He said that the Law on Foreign Trade Management will come into force on January 1. Article 9 of the decree guiding this law’s implementation will have regulations related to the age of machinery and equipment imported into Vietnam and the process for special cases.

The deputy minister insisted that imported equipment must meet the standards of safety, energy efficiency and environmental protection in accordance with standards of Vietnam and some G7 countries.

Decree 116/2017/ND-CP on automobile production, assembly and import and maintenance services for automobiles causes problems for importers, said Toru Kinoshita, a member of JBAV. The decree requires some certificates provided by foreign authorized agencies.

The association recommends that the Government apply only the model test for each vehicle type of the first shipment and accept the test report for subsequent shipments over a six-month period.

Minister and head of Government Office Mai Tien Dung, who is also Chairman of the Advisory Council for Administrative Procedure Reform, explained that Decree 116 is intended to protect producers and consumers. The minister said it is important to inspect each batch of goods to assess compliance with the law.

However, Dung asked the Ministry of Transport to cooperate with the Ministry of Justice and the Ministry of Industry and Trade to revise the regulations. He affirmed that the recommendations and questions from the Japanese enterprises will be considered by Vietnam’s authorized agencies.

The official emphasized that the Vietnamese Government will continue to create a clear business environment for foreign investors.
​Phuong Thao
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