2014 figures show major overall decline but rise in real estate.
Japanese investment in Vietnam in 2014 stood at $2.05 billion, a 65 per cent decline compared to 2013, according to the Japan External Trade Organization (JETRO). The 2013 figure of $5.87 billion was the highest in the five preceding five years.
Capital for the newly-registered projects fell just slightly, from $1.4 billion to $1.2 billion, while additional capital to existing projects fell 81 per cent, with project numbers declining from 352 to 298.
By way of explanation, JETRO said that Japan's economic situation in 2014 was beset by difficulties. The Yen was also devalued, so large enterprises hesitated to invest in foreign countries.
In 2014 and the beginning of 2015 the majority of investment projects in Vietnam has small capital. Eighty-five per cent of investment projects from Japan last year had less than $5 million in capital and accounted for 61 per cent of the total.
Manufacturing projects saw the sharpest decline. The number of new projects in the sector fell from 161 to 108, with capital falling from $1.1 billion to $828 million.
Only the construction and real estate sector attracted more FDI last year, rising from $23 million in 2013 to $155 million.
The business performance of Japanese enterprises in Vietnam was better than in Indonesia, with the proportion in the former recording a profit being 60.9 per cent, according to JETRO's report on the business performance of Japanese enterprises in 20 Asian countries. Nonetheless, in other countries such as the Philippines, Thailand, and Malaysia the figure was even higher, at 71.2 per cent, 66.9 per cent, and 66.4 per cent, respectively.
In 2014 South Korea still held the leading position in new investment and additional capital. South Korean projects accounted for 31 per cent of project numbers and 36 per cent of capital.