Hanoi (VNA) - Vietnam is a strong candidate among the alternative investment destinationsas Japanese enterprises are moving away from China due to the COVID-19 pandemic,according to Hirai Shinji, Chief Representative of the Japan Trade PromotionOrganisation (JETRO) in Ho Chi Minh City.

One lessonlearned from the pandemic is how vulnerable an economy is to an unexpecteddisaster if it depends heavily on the supply of parts and materials from oneparticular country, Shinji told Vietnam Investment Review, so Japan’s Ministryof Economy, Trade and Industry (METI) announced a plan in early April to createa more resilient economy through a double-track supply chain.

Japan hastherefore earmarked 2.2 billion USD of its economic stimulus package to helpits manufacturers shift their production out of China - an essential part ofthe global supply chain now disrupted by the COVID-19.

Thefunding will support companies to move production back to Japan or elsewhere,especially Southeast Asia.

Among the ASEANnations, Vietnam will be a strong candidate because its economy is expected togrow quickly once it recovers from the shock of the pandemic. The risk managementcapacity demonstrated by the Vietnamese Government in bringing COVID-19 undercontrol is held in high regard by Japanese enterprises, the official added.

Comparedwith its regional peers, Vietnam is more attractive to Japanese investors whenit comes to market size and growth potential, political stability, and livingenvironment for foreigners, he noted, adding that the government has also put mucheffort into legislation and taxation and public administration reforms.

Rising labourcosts in Vietnam affect Japanese manufacturers serving export markets, hecontinued, but this is not a major problem for Japanese companies targeting thedomestic market. Indeed, a growing number of Japanese investors are now turningtheir focus to the lucrative domestic market, the official said.

Vietnamhas witnessed a sharp increase in Japanese investment in the retail andservices sectors over recent years, he went on, citing the rise of Japaneseretail giant AEON and convenience store chains Family Mart, MiniStop, and7-Eleven as examples.

Therecent emergence of leading fashion brand UNIQLO also reflects the growinginterest among Japanese businesses in Vietnam’s domestic market, he said./.