But concerns have been raised about the country’s limited supporting industries.
Nearly 70 percent of Japanese businesses plan to expand their Vietnam operations this year, according to the Japan External Trade Organization (JETRO)’s annual business confidence survey, up from last year’s over 60 percent.
The rate was the highest among 19 countries and territories surveyed by the Japanese business chamber, said Takimoto Koji, director of JETRO’s office in Hanoi.
The annual survey, conducted between October and November, revealed Japanese companies still feel welcome in Vietnam due mainly to political and social stability, the market size and growth potential.
88 percent of respondents identified surging revenue as the main reason for expanding their existing businesses in Vietnam.
Over 60 percent of Japanese companies reported profits in 2016, up 4 percentage points from a year ago, according to JETRO.
Meanwhile, 46 percent, mostly from the manufacturing sector, justified their expansion plans by saying there is more potential for growth in Vietnam.
Nearly 23 percent felt increasingly welcome in the country thanks to stronger partnerships with local businesses.
Vietnam’s business climate was ranked fourth out of the 19 countries and territories surveyed, with 63.4 percent of respondents positive about the country’s social and political stability and more than 50 percent positive about market scale, growth potential and low-cost labor, the survey said.