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Many Japanese enterprises operating in Thailand have tended to move labor-intensive projects to regional countries, including Vietnam, due to rising local labor costs.
Hirotaka Yasuzumi, managing director of the HCMC Office of the Japan External Trade Organization (JETRO), said that the worker wage in Thailand was twice that in Vietnam. According to a wage survey of JETRO, the wage in Thailand averages US$6,704 per person per year while that in Vietnam is US$2,602. For the managerial level, the respective figures are US$27,204 and US$12,245.
Therefore, many enterprises in Thailand have moved part of their production activities to Laos, Cambodia and Vietnam. However, JETRO often advises Japanese enterprises to move to Vietnam, as its survey shows that the number of skilled laborers in Laos and Cambodia is lower than in Vietnam.
The major challenge Japanese enterprises encounter when making investments in Vietnam is the lack of supporting industries. Suppliers in Vietnam can meet only 28% of the materials demanded by Japanese enterprises, which have to import the rest, resulting in higher production costs. In addition, Japanese investors are most concerned over issues regarding complex tax and customs procedures, unclear policies and incomplete legal system.
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