HANOI -- Japan became Vietnam's biggest foreign direct investor in 2017, reclaiming the crown from South Korea after a three-year gap.
Foreign direct investment in the Southeast Asian nation jumped 44.4% on the year to $35.8 billion, according to government statistics up to Dec. 20. Japanese investment more than tripled to a record $9.11 billion, accounting for a quarter of the total. Infrastructure exports were a major driver of Japanese spending.
The largest project was Marubeni's $2.79 billion coal power plant in Nghi Son, Thanh Hoa Province. The trading house will undertake this project via a build-operate-transfer contract.
Sumitomo Corp.'s $2.58 billion coal plant in Khanh Hoa is another notable project, while Mitsui Oil Exploration is participating in a $1.27 billion gas pipeline project in Kien Giang. Both provinces are in southern Vietnam.
The number of Japanese investments increased 23% to a record 1,025. Small and midsize manufacturers, distributors and service companies have stepped up spending, and more businesses are buying into Vietnamese enterprises. Sekisui Chemical acquired a 15% stake in state-owned Tien Phong Plastic this October as Vietnam moves to reform state enterprises.
South Korea was the top foreign investor in Vietnam from 2014 to 2016 as Samsung Electronics set up massive smartphone production facilities in the north and such conglomerates as LG, CJ and Lotte spent actively.
Meanwhile, Japanese investment declined as efforts by major manufacturers to set up shop here ran their course. But now infrastructure exports are creating a new wave of investments by the Japanese, just as Vietnam is working to lure more private-sector money into infrastructure development amid mounting public debt.
Japanese construction technology is highly regarded in Vietnam, and more infrastructure projects are being undertaken via public-private partnerships. Many are hopeful that Japanese involvement will bring advanced technologies and improved business management.
State-owned Vietnamese companies are gearing up to float their shares on the market soon. Prime Minister Nguyen Xuan Phuc has expressed hopes that Japanese businesses will become strategic investors and help create new momentum for reform of state enterprises.