The Japan Business Association in Vietnam (JBAV) has said Vietnam is losing its advantage of cheap labour and must focus on developing support industries and Japanese firms can help with technology transfers.
The problem was discussed at the Vietnam Business Forum 2017 on June 16.
In the past years, increased basic wages in Vietnam have surpassed the CPI. The wages of Vietnamese workers are now higher than Filipino workers in several industries. Both Malaysia and Thailand have held down wages.
Hiroshi Karashima, head of the JBAV, claimed, “Including social welfare and union benefits, labour costs in Vietnam are as high as Thailand.”
Karashima said increased wages would mean Vietnam would lose a competitive advantage. Moreover, Vietnamese firms needed to invest more to improve productivity.
In order to do that, Vietnam must develop support industries with small and medium-sized enterprises as the core immediately. Japanese enterprises can co-operate and transfer technology and experience for the Vietnamese partners.
Many Japanese firms are planning to move their headquarters to Vietnam and other countries. This move can have positive impacts on the development of support industries in Vietnam.
However, Karashima said they were having difficulties with the policies on importing used machines over 10 years old and hoped that the machines would be considered as fixed assets for import despite their age.
He also wants the local authorities to put more effort into issuing work permits for Japanese experts in support industries Japan and its firms are willing to help and contribute to Vietnam’s economic development, he said.
Dang Huy Dong, deputy minister of Planning and Investment agreed that Vietnam was ending low pay and needed to look at competitiveness as the country increasing integrates into the world economy.