Vietnam’s total exports to Japan reached USD 11.38 billion in the first six months of 2022, up nearly 13% over the same period last year, according to the General Department of Customs. Moreover, businesses in Japan that are likely to get government subsidies are looking forward to entering the mushrooming market of Vietnam. This will act as a catalyst in fostering Japan-Vietnam Trade Relations.
The Japanese government has continued to lend support to Vietnam during the pandemic including the easing of travel restrictions to Vietnam which is critical to boosting economic cooperation between the two countries.
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The government of Vietnam has also made detailed attempts in creating conducive conditions for Japanese diplomats, investors, experts, and business people to come back to Vietnam.
Trade volumes between Vietnam & Japan
According to a comprehensive report by the OEC, Vietnam’s exports to Japan rose 10.7% annually from 1995 to 2020. In 2020, Vietnam clocked USD 20.4 billion in exports to Japan. Among its main exports were insulated wires valued at USD 2.03 billion, broadcasting equipment worth USD 1.27 billion, and fuel wood valued at USD 622 million. However, the country did not export any services to Japan in 2020. Refer to the table below to understand trade between the two nations by product segment in the year 2020:
|Product Segment||Vietnam exports to Japan|
|Machines||USD 6.35 billion|
|Textiles||USD 4.42 billion|
|Miscellaneous||USD 1.35 billion|
|Product Segment||Vietnam’s import from Japan|
|Machines||USD 6.81 billion|
|Metals||USD 2.89 billion|
|Plastics and Rubber||USD 1.14 billion|
Furthermore, in the year 2021, a total of USD 43 billion was exchanged between the two countries, of which USD 20.13 billion was exported by Vietnam and USD 22.8 billion was imported.
In the first 6 months of the year 2022, Vietnam’s exports to Japan clocked USD 11.38 billion according to Vietnamplus. Product segments that exceed USD 1 billion in exports are mentioned below:
|Products Segment||Exports Value|
|Textiles And Garments||USD 1.67 billion|
|Machinery, Equipment, Tools And Spare Parts||USD 1.3 billion|
|Transportation And Spare Parts||USD 1.2 billion|
Moreover, the country also imported products worth USD 12 billion from Japan during the same period, representing an increase of 10.6% (YoY). Product segments that exceed USD 1 billion in imports are mentioned below:
|Product Segment||Imports value|
|Computers, electronics and components||USD 3.5 billion|
|Machinery, equipment, tools, and spare parts||USD 2.14 billion|
|Iron and Steel||USD 1 billion|
Why is Vietnam an attractive destination to Japanese Investors?
The stable political environment and growing economy of Vietnam make it a desirable investment destination for Japanese companies. Moreover, the country is a part of various significant bilateral trade agreements aimed at fostering trade together with Japan.
Vietnam-Japan Economic Partnership Agreement (VJEPA)
Vietnam-Japan Economic Partnership Agreement (VJEPA), which became effective on October 1, 2009, covers a wide range of topics, including trade in goods and services, investment, improving the business environment, and allowing people to move freely.
By 2026, the Vietnamese Government aims to eliminate 90.64% of tariff lines. Moreover, 29.14% of tariff lines had already been eliminated.
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Japan & Vietnam in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
Using CPTPP, trade barriers are eliminated and clear rules are established that make CPTPP markets a consistent, transparent, and fair place to conduct business.
Vietnam and eleven other countries have signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). As part of the CPTPP, virtually all aspects and sectors of trade are covered in order to reduce trade barriers and facilitate trade between Vietnam and member countries, including Japan.
It emphasizes commitments for access to the markets in various areas, including goods and services trade, investment, government procurement, labor mobility, and investment in infrastructure. A number of chapters in the agreement address key issues such as technical barriers, customs administration and state-owned enterprises, helping to create a stable, transparent, and fair environment to do business in CPTPP markets.
Japan & Vietnam in the Regional Comprehensive Economic Partnership (RCEP)
With regard to being a transformative accord, the Regional Comprehensive Economic Partnership (RCEP), the world’s largest free trade agreement (FTA), went into effect on January 1, 2022. With Vietnam and Japan as members, it’s expected to enhance their trade relationships on top of CPTPP and other agreements.
In the RCEP, tariffs will be removed on more than 90% of goods over the next 10 to 15 years, and investment and intellectual property rules will be introduced. This will create new trade opportunities, new protections and accelerate the recovery of the region’s economy.
Exports continue to play a pivotal role in improving Vietnam’s economy. Thanks to the government’s investment and trade-friendly policies that attract foreign investors to collaborate with businesses in Vietnam, especially those from Japan which has proven to be one of Vietnam’s most crucial partners.