Japan and Vietnam

Vietnamese are studying and living all over the world, but the big jump in Vietnamese residents of Japan surprised me, or at least made me interested in looking into it a bit more.

VIETNAMESE ARE MOVING TO JAPAN IN LARGE NUMBERS! SOURCE: JAPAN MOJ

First, the numbers around Vietnamese in Japan have just soared in the past few years. Since 2011, the numbers have grown in double digits, and not 11% or 12%, more like 38% or 47%. See the chart to the right. Overall foreign residents have also been increasing at a good pace - 7-8% in each of 2016-2018. In total there are 2.7 million foreigns resident in a nation of 127m.

Japan has a population problem, or let’s say situation. Their population is declining. In 2018, the birthrate dropped to the lowest rate since 1899, when data gathering began. By 2049, the population could be less than 100m, and by 2036, one in three could be elderly (these stats from this article). Japan has a reputation for not welcoming immigrants, but the government is trying to allow more workers in.

JAPANESE INVESTMENT IN VIETNAM ALSO HIGH. SOURCE: JETRO. NOTE: BALANCE OF PAYMENTS BASIS, NET AND FLOW

From the Vietnamese side, it appears to be a lot of technical training, about half, according to this article. And a good amount are also overstaying their welcome - 11,131, up 64.7%!

Overall, ties between Japan and Vietnam are pretty strong, with Japan investing a lot of money in the country. This has been a pretty consistent upward trend since about 2000 (except for a big jump in 2012 and 2013 that reverted back in 2014).

Japan was the largest investor in Vietnam in 2018, and it has been in the top 5 for many years and lead for overall investment in Vietnam.

JAPAN’S INCOME FROM ABROAD IS INCREASING FASTER THAN DOMESTIC INCOME IS. SOURCE; WORLDBANK. NOTE: THIS TAKES GNI OVER GDP (USING CURRENT PRICES FOR USD)

This leads me to a tangential question about Japan itself. With a declining population and little appetite for a big increase in foreigners (still below 3% of the total population, and many of them not treated perfectly), one response would be to invest abroad and repatriate the profits to support the domestic population. Basically, move the capital to the population, but then have the returns come back to the mother land. And we have seen that more and more.

I pulled some data on the ratio of GNI to GDP. GNI measures all income for a nation (including income from investments abroad), while GDP is just what is produced locally. Over time, we have seen a pretty big increase in this ratio (mean more production outside) for Japan. It still is not to the level of the UK back in the seventies (where the ratio reached 1.084), but there is a noticeable upward slope. I also looked at the US, where the ratio sits right around 1.00 with some oscillations.

The data on Vietnam is a lot more volatile, and I am not sure why. But it does appear that now GDP is much higher than GNI (the GNI to GDP ratio is 0.95, or like the UK back in 1995), the reverse of Japan. It will be interesting to see if Japan's figures continue to move in this direction. Given the population, I don’t see how it wouldn’t.

And Vietnam is well placed to get investment from Japan, which will push this ratio up. I think that’s what ties these two ideas together: more Vietnamese in Japan means there are more Vietnamese than understand Japan and Japanese people. They can go back to Vietnam eventually and work for Japanese companies there. They will be the bridge between the two cultures, or, to mix metaphors, they can be the funnel that takes Japanese investment and makes it work in Vietnam. Let’s see if it works.