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59.5% of Japanese companies are anticipated to be profitable in 2022 in Vietnam

The rate of Japanese enterprises in Vietnam forecast to be profitable in 2022 is 59.5 percent, up 5.3 percentage points compared to 2021, according to a survey on Japanese investment in Asia and Oceania 2022 conducted by the Japan External Trade Organization (JETRO) in Vietnam.

Many enterprises said business this year has improved compared to last year largely due to the strong recovery, especially in consumer goods manufacturing and the service industry.

However, some said they face difficulties in purchasing raw materials due to higher labor and logistics costs, the survey found.

Although the rate of enterprises forecasted to be profitable will increase compared to 2021 (54.33%), this rate is still significantly lower than the average rate of ASEAN (63.5%) and some other countries. such as Korea (85.5%), Singapore (73.5%), India (71.9%), and China (64.9%)...

Sixty percent of Japanese enterprises intend to expand their investment in Vietnam over the next one or two years, up 4.7 percentage points from the previous year and the highest among Southeast Asian countries.

Notably, the proportion of profitable enterprises in the manufacturing and non-manufacturing sectors both increased year-on-year, increasing by 3.6 percentage points and 6.1 percentage points to 61.1% and 57.6 respectively %. The transportation machinery industry (100% of enterprises forecast to be profitable); rubber, ceramics, stone (84.6%); paper, wood products, and printing (75%) are in the Top 3 manufacturing industry groups with a number of enterprises optimistic about market prospects.

Meanwhile, finance - insurance, education - health care, agriculture, forestry, and fishery are the 3 groups of industries with the most optimistic forecasts about business profit prospects in 2022 (both at 100% rate). ).

According to JETRO, the reason for the improvement in the production and business situation of Japanese enterprises is due to the strong recovery of the economy after the pandemic from easing travel restrictions, improving industry productivity, expanding exports, and increasing domestic consumption.

However, increased costs of purchasing raw materials, spare parts, logistics costs, exchange rate fluctuations, labor costs, and the impact of the war in Ukraine are the reasons why Japanese businesses operating in Vietnam declined.

According to JETRO, in this context, 60% of enterprises surveyed said that they would continue to expand their production and business activities in the next 1-2 years (up 4.7 percentage points compared to the previous year), ranking first in ASEAN countries, just behind India and Bangladesh. Meanwhile, the rate of enterprises reducing production or moving to a third country/region was only 1.1% (down 1.1 percentage points compared to the previous year), the lowest in ASEAN.

This demonstrates how Japanese companies have the propensity to stay in the Vietnamese market for an extended period of time, according to JETRO.




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