Jetro reports very low localization rate of Japanese businesses in Vietnam

According to the Japan External Trade Organization (Jetro), despite cooperation efforts between Vietnam and Japan have seen positive development in recent years, the localization rate of Japanese businesses in Vietnam was very low reaching only 32.1 percent last year.

Workers at Japanese Misumi Group Company in HCMC (Photo: SGGP)

The rate was a 10 percent increase compared to 2010 but slight reduction over 2014 when it touched 33.2 percent.
Meantime, the localization rate of Japanese businesses in China, Thailand, Indonesia and Malaysia were 64.7 percent, 55.5 percent, 40.5 percent and 36 percent respectively.
Of the 32.1 percent, the ratio of components that Japanese firms purchased from Japanese suppliers in Vietnam was 45.1 percent, from Vietnamese firms was 41.2 percent and others such as Taiwanese invested companies was 13.7 percent.
Therefore the component supply ratio by Vietnamese firms to Japanese businesses was in fact less than 13.2 percent.
Jetro proposed authorized agencies to soon solve problems in tax policies amid the current integration context and remove regulations raising difficulties for businesses. The Government should issue policies encouraging and assisting Vietnamese companies to attend the supply chain.

By Lac Phong – Translated by Hai Mien

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