Edano in push to crack rapidly expanding Vietnamese market

Posted on August 17, 2012

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A bustling Hanoi street market (Asahi Shimbun file photo)

HANOI–Trade minister Yukio Edano visited the Vietnamese capital to promote the first Japanese-made small passenger jet, parts of which are assembled in Hanoi.

With a sagging domestic economy hindered by the European sovereign debt crisis and the strong yen crippling its exports, Japan has encouraged its public and private sectors to aggressively tap the rapidly growing Vietnamese economy.

Edano said Aug. 15 that joint cooperation was essential to expanding the aircraft business.

If Japan can sell the Mitsubishi Regional Jet to national carrier Vietnam Airlines Co., it could lead to a rush of orders from other Asian countries.

A subsidiary of Mitsubishi Heavy Industries Ltd. assembles aircraft parts in Hanoi.

Edano said an order from Vietnam Airlines would be good for the country’s economy.

Bui Quang Vinh, Vietnam’s planning and investment minister, met with Edano and made clear his government is agreeable to aircraft purchases.

Japanese manufacturers have increasingly set up production bases in the country as an alternative to China, where labor costs are rising. The number of Japanese firms in Vietnam has more than doubled in the past decade. Major companies in the service sector, such as supermarket chain Aeon Co., also have a presence in the Vietnamese market.

Direct investment from Japan has been on the rise, reaching $2.04 billion (160 billion yen) in 2010.

Vietnam also has deposits of rare earth elements.

China has restricted its exports of rare earths, which are vital in the production of high-tech products.

Edano also met with Prime Minister Nguyen Tan Dung to win his approval to go ahead with development of a rare earth mine.

A junior high school and a clinic were built near the mine with the Japanese government’s official development assistance.

In fiscal 2011, Japan provided Vietnam with 270 billion yen worth of loans with low interest rates. Japan has become the largest contributor in Vietnam.

Hanoi, meantime, has been courting investment from other countries.

Myanmar, now making strident steps toward democratic rule after a half-century of military leadership, has also emerged as a rival in attracting foreign investment.

Myanmar’s economy, like Vietnam’s, is booming. Myanmar also has a sizable population, and labor costs are low.

Many Japanese firms are keen to set up production bases in Myanmar.

In response, Vietnam came up with an industrialization strategy to develop ports, transportation and other infrastructure.

A top official of the Japanese trade ministry, along with Japan’s ambassador to Vietnam, are serving as advisers for the initiative. They are only the foreign government representatives assisting in the effort.

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