Japanese investors unsatisfied with infrastructure in Vietnam

The Japan Bank for International Cooperation’s (JBIC) survey in the 2008 fiscal year reveals that Japanese investors continue to worry about underdeveloped infrastructure in Viet Nam, particularly roads, ports and power systems.

JBIC’s survey was compiled based on 620 questionnaires collected from Japanese companies overseas. According to the survey, 2008 is the third consecutive year that Vietnam ranks third among countries and regions that have medium-term business potential, after China and India.

Low labour cost is still the main reason why Japanese investors see Viet Nam as a country with investment potential. Other elements include market development potential, risk diversification, and abundant human resources.

However, according to Matsuda Noriyasu, chief representative of JBIC in Viet Nam, many Japanese investors say labour costs in Viet Nam have increased and become a new concern.

Notably, only 48% of Japanese businesses appreciate the “market development potential” of Viet Nam, compared to 53.4% last year.

Matsuda Noriyasu said Japanese companies continue to worry about underdeveloped infrastructure in Viet Nam, especially roads, ports and power. “This is the most serious matter to Japanese producers,” JBIC’s survey noted.

Some 78% of Japanese businesses said roads in Viet Nam need to be improved while 60% said the power supply and 45% said seaports need to be upgraded.

At the Viet Nam Enterprise Forum (VEF) on Monday, a report by VEF’s infrastructure working group stated that the need for electricity in Viet Nam rises by 17% per year. Viet Nam will need from $1-6 billion annually to invest in thermo-power plants to satisfy the demand and the requirement for investment in the power system will be $60 billion by 2028.

The Ministry of Planning and Investment calculates that in the next five years, the need for investment in telecommunications, seaports, airports, roads, railways, and aviation transport will be $139 billion. (VNN)