Japan’s ageing population spurs military transformation and economic expansion in Vietnam

The situation fuels the expansion amidst the way it challenges geopolitical stability

Japan’s ageing population does not necessarily mean the country is in terminal decline. image_vulture/Shutterstock

The effects of ageing populations on geopolitical stability are partially explained by Geriatric Peace Theory in the Harvard International Review, which predicts that ageing societies will require more young workers to sustain the social safety net. Yet, Japan appears to be an exception, and its military rearmament in the face of the rise of China in the region complicates Japan’s foreign policy stances. 

However, contrary to conventional wisdom, Japan’s ageing population does not necessarily mean the country is in terminal decline. Instead, it is transitioning to a more high-technology, low-personnel military and developing deeper regional ties with allies to stabilise the regional balance of power.

According to Vietnam Investment Review, Sumitomo Mitsui Banking Corporation (SMBC) has acquired a 16.73 percent stake in Vietnamese lender VPBank for around JPY206.82 billion (USD1.5 billion), enabling SMBC to expand its operations in Vietnam and fund significant projects in the country. With this strategic investment, VPBank became the second-biggest bank in Vietnam by equity. 

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Separately, Kredivo Holdings has raised JPY37.22 billion in equity financing in a significantly oversubscribed round led by Japanese bank Mizuho Bank, and also partnered with other firms to provide buy now, pay later products for Vietnamese customers. Other Japanese banks, including MUFG Bank, are also signalling ambitions to ramp up their footprints in Southeast Asia.

Vietnam Briefing reported Japanese retail companies are expanding their presence in Vietnam, despite many other retailers pulling back amid global economic uncertainty. According to a recent survey by the Japan External Trade Organization (JETRO), 60 percent of Japanese enterprises operating in Vietnam plan to expand their businesses in the country in the next one to two years. 

This is despite weak purchasing power and the deserted state of many shopping centres. Japanese firms such as AEON, BRG Retail, Takashimaya, Family Mart, MiniStop, 7-Eleven, Uniqlo and MUJI Vietnam are expanding in Vietnam due to its growing economy, the high quality of Japanese goods and operating in a unique niche.

The Property Report editors wrote this article. For more information, email: [email protected].