Japanese Firms in Vietnam Hit 16-Year Profit High as Expansion Accelerates

JETRO data signals Vietnam’s strongest Japanese business outlook since 2009, beating ASEAN averages and reshaping Asia supply chains

Vietnam has just delivered one of the strongest confidence signals to global investors in Southeast Asia. The share of Japanese companies in Vietnam expecting to post profits in fiscal year 2025 has climbed to 67.5%—the highest level in 16 years—according to a new survey by Japan Trade Promotion Organization (JETRO). The figure not only marks a post-pandemic inflection point but also places Vietnam ahead of the ASEAN average for the first time in five years.

The result matters far beyond Japan-Vietnam ties. Japanese manufacturers and retailers sit at the core of Asia’s supply chains, and their profitability often serves as an early indicator of where capital, production, and technology will flow next. Vietnam now ranks just behind the Philippines and Indonesia within ASEAN on expected profitability, while outperforming several traditional regional manufacturing hubs.

The momentum is broad-based. Manufacturing firms report a notably stronger outlook, with more than 74% expecting profits, driven by renewed global orders—particularly in textiles and garments. Non-manufacturing sectors are also gaining traction, supported by rising domestic consumption. Real estate, education, and healthcare businesses posted some of the sharpest improvements, with profit expectations jumping by over 20 percentage points year-on-year. Companies operating in wholesale and retail are benefiting directly from Vietnam’s expanding middle class and resilient consumer demand.

Looking ahead, nearly half of Japanese firms expect profits to improve further in fiscal 2026, a level well above the Asia-Pacific average. Expansion plans reinforce that optimism: 56.9% of Japanese companies intend to scale up operations in Vietnam over the next two years—the highest rate in Southeast Asia for the second consecutive year and second only to India and Pakistan across the wider region. Both manufacturers and service firms cite Vietnam’s growing domestic market and export potential as decisive factors.

Vietnam’s appeal remains anchored in fundamentals that global investors understand: market size, competitive labor costs, and socio-political stability. Japan continues to be a major capital source, ranking fourth in newly registered foreign direct investment in 2025, with US$1.62 billion deployed, according to the General Statistics Office. At the same time, Japanese interest is shifting toward higher-value segments, including semiconductors, electronics, digital transformation, and AI-driven services. Production hubs such as Honda Vietnam illustrate how Vietnam is moving beyond low-cost assembly toward more sophisticated manufacturing.

The outlook is not without friction. Complex administrative and tax procedures remain the top concern for Japanese firms, alongside legal uncertainty and rising labor costs. Yet for many investors, these risks are being outweighed by scale, growth, and strategic positioning in an increasingly fragmented global economy.

The bigger question now is whether Vietnam can convert this corporate confidence into sustained, double-digit growth. Japanese executives point to the same priorities global markets are watching closely: deeper regulatory reform, faster digital transformation, higher-quality talent, and a stronger startup ecosystem. If Vietnam delivers on these fronts, today’s profit surge may mark not a peak—but the beginning of a new investment cycle that reshapes Southeast Asia’s economic map.