This information was revealed in the results of the Survey on the Business Conditions of Japanese Companies Abroad for fiscal year 2025, published by the Japan External Trade Organization (Jetro) on the afternoon of 13/2.

This also marks the first time in five years that this rate has surpassed the ASEAN average of 65.3%. Within the region, Vietnam's profitability rate ranks behind the Philippines (75.3%) and Indonesia (69.1%).

Compared to 2024, the percentage of Japanese businesses in Vietnam expected to be profitable increased by 3.4 percentage points. Meanwhile, 17.6% of businesses faced losses, a decrease of 1.7 points. Manufacturing businesses showed a more positive outlook, with over 74% projected to be profitable, compared to 61.2% in the non-manufacturing sector. Notably, the real estate, education, and healthcare sectors saw profit rates rise by 20 points or more.

According to Okabe Mitsutoshi, Chief Representative of Jetro in TP HCM, the increase in profits for manufacturing businesses was mainly seen in the fiber/textile and garment group, driven by rising order demand. In the non-manufacturing sector, wholesale and retail businesses performed well due to increased domestic demand.

For fiscal year 2026, 47.6% of Japanese businesses in Vietnam anticipate improved profits, higher than the regional average of 42.7%.

Production of electric motorcycles at Honda Vietnam's factory in Vinh Phuc, 27/3/2025. *Photo: Nguyen Linh*

Given the favorable business conditions, 56.9% of Japanese businesses plan to expand operations in Vietnam in the next one to two years, marking the second consecutive year this figure is the highest in Southeast Asia. This result represents a 0.8 percentage point increase compared to 2024.

The percentages of businesses in the manufacturing and non-manufacturing sectors intending to expand are 51.1% and 61.7%, respectively. "Businesses in both sectors cited expanding domestic market demand and increasing exports as reasons for their business expansion", said Okabe Mitsutoshi, Chief Representative of Jetro in TP HCM.

Across all Asia-Pacific markets surveyed by Jetro, the percentage of Japanese businesses planning to expand in Vietnam ranks only behind India, Pakistan, and is comparable to Bangladesh.

Japanese businesses identified the top three attractive aspects of Vietnam's business environment as market size/growth potential (68.4%), low labor costs (55.2%), and stable political-social conditions (53.2%). All these factors showed an increase compared to the previous year.

However, the survey also noted risks that make Japanese businesses hesitant, such as complex administrative and tax procedures, an incomplete legal system, and rising labor costs. Administrative procedures, in particular, remain the biggest challenge, with 67.5% of respondents citing it, an increase from 2024.

Japan ranked 4th in new registered foreign direct investment (FDI) into Vietnam in 2025, reaching 1.62 billion USD, a 9.4% increase compared to 2024, according to the General Statistics Office (Ministry of Finance). Okabe Mitsutoshi stated that they recently hosted business delegations exploring new, advanced technologies for collaboration.

"Businesses in the semiconductor and electronics industries are conducting exploratory visits and surveys. Additionally, many Japanese companies are seeking out Vietnamese startups to develop products and services that align with market demands in digital transformation and AI. I believe this trend will intensify", he commented.

Regarding the goal of double-digit GDP growth in the coming period, Okabe Mitsutoshi recommended that Vietnam needs to escape the middle-income trap through extensive reforms, robust digital transformation, high-quality human resource training, and nurturing startups.

Vien Thong