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Japan, Vietnam to agree to bolster supply chains during Suga's visit

In this Oct. 9, 2018 file photo, Vietnamese Prime Minister Nguyen Xuan Phuc delivers a speech during a business forum in Tokyo. (Kyodo)

TOKYO (Kyodo) -- Japan and Vietnam plan to agree to facilitate the cross-border flow of medical equipment and other goods when Prime Minister Yoshihide Suga visits Hanoi next week, government sources said Wednesday, part of a push to diversify supply chains in light of the coronavirus pandemic.

    Suga is also hoping to sign an agreement enabling Japan to transfer defense equipment and technology to Vietnam in a planned meeting with his counterpart Nguyen Xuan Phuc, the sources said.

    Japan relies on imports for much of its medical equipment, with around 80 percent of its face masks supplied by China. As demand for face masks surged following the outbreak of COVID-19 earlier this year, many stores struggled to maintain stock as domestic manufacturers scrambled to boost output.

    In a bid to reduce its dependence on China, Japan is giving subsidies to firms that move production to Southeast Asia, which is both geographically well-placed and able to provide relatively cheap labor.

    Of the 30 firms that have already been chosen to receive the subsidies, including manufacturers of goods ranging from medical gowns to car engine parts, half are planning to set up in Vietnam.

    During his visit, Suga is also slated to make a speech at Vietnam Japan University, a symbol of bilateral educational exchanges that opened in Hanoi in 2016 with funding from both governments, according to the sources.

    The prime minister, who is traveling overseas for the first time since taking office in mid-September, also looks to reach a similar understanding with Indonesian President Joko Widodo on the second leg of the trip.

    The agreement with Vietnam on transferring defense equipment and technology would allow Japan to export patrol planes and radar among other things, which could help Vietnam to better counter China's growing territorial claims in disputed areas in the South China Sea.

    Japan already has similar arrangements with several countries including the Philippines and Malaysia, which along with Vietnam have contesting claims with China in the strategic waterway through which more than a third of global trade passes.

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