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April 20, 2007

Representative Office Scheduled to be Opened in Hanoi ~To collect information and expand business opportunities in Vietnam where investment is growing ~
Iwatani International Corporation

Iwatani International Corporation(Headquarters: Osaka & Tokyo, President: Akiji Makino, Capital: 20,000 million yen) will open a new representative office in Hanoi, Vietnam, about mid- July, with a view to developing new business opportunities - including joint ventures with local firms and independent capital investment, and to expanding existing trade.
The formal name will be the “Hanoi Representative Office”. A suitable location is now being sought in Hanoi City. An application for establishment of the office will be submitted to the government at the beginning of June, and the office will open around mid-July immediately after the application is approved.
Iwatani has carried out global business dealing mainly with gas and energy and extending to materials. In addition to 95 business offices in Japan, we have established an overseas branch office in Singapore, and representative offices in Beijing, Manila, Jakarta, Perth, and Prague. Our subsidiaries and affiliates are located in China, Hong Kong, Taiwan, Korea, Singapore, Thailand, Malaysia, Indonesia, the U.S., Germany, and Australia. The overseas business has a particularly close connection with China, which shares a border with Vietnam. This relationship has existed for more than 40 years; there are 37 business bases including group companies across China in various business fields, ranging from industrial gases to chemicals, metal products, and foods.
【Why we open an office in Hanoi, Viet Nam】
We are aware that Vietnam as a whole has great market potential for industrial gases, our key business. The new representative office will be a base for developing a variety of new businesses, exploiting our unique organizational abilities. The representative office will be opened in Hanoi because the head offices of major administrative agencies are concentrated in the city, making it easy to obtain certificates and permissions, and to collect information.
【Background to business expansion to Hanoi, Vietnam】
(1) Increased foreign investment in Vietnam
One of reasons for opening a representative office in Hanoi is an apparent recent increase in direct foreign investment in Vietnam.
Vietnam finally achieved a wish it had fervently held for over 11 years in January 2007, when it was formally admitted to the WTO. The domestic economy will now be more active. It is particularly notable that the country has been revising its laws and regulations to comply with international standards and serve the country’s goal of accession to the WTO. The enforcement of the Common Investment Law and the Enterprise Law in place of the conventional Law on Foreign Investment and Law on the Promotion of Domestic Investment, means foreign corporations can now compete with domestic companies under the same laws, largely simplifying formal procedures and liberalizing foreign investment. Large investors, for example, such as the Intel Corporation of the United States, and POSCO, the biggest iron and steel company in Korea, initiated businesses investments in Vietnam last year, and new and expanded investments in total reached a record high of $11.3 billion. An increasing number of parts manufacturers in Japan have also moved to Vietnam in the wake of their predecessors, major manufacturers.

(2) Highly evaluated by Japanese corporations as a place for overseas business expansion
Many Japanese corporations previously put their business base in the south around Ho Chi Minh City but, since 2005, 60 to 70 percent of corporations have settled in the northern region around Hanoi. This trend is likely to continue in future. Business opportunities are expected to increase for Iwatani, which deals, among other things, in gases, related materials, and production machinery. In a survey by the Japan Bank for International Cooperation in 2006, Japanese corporations highly appreciated the “low-cost labor,” “skilled work force” and “political and social stability” of Vietnam as a destination for growth compared with other Asian nations. Particularly notable is the monthly wages of general factory workers in the major cities, Hanoi and Ho Chi Minh. These are among the lowest for the major cities in Asia (as of 2005), in spite of the country’s high literacy rate of 90 percent. The country is regarded as having an outstanding labor force which can achieve high quality at low costs.

(3) Improved physical distribution infrastructure and country risk taker
Vietnam shares its northern border with the Guangxi Zhuang Autonomous Region of China, and is also close to Guangdong. This means we can develop the business having an organic solidarity with our group companies in China in terms of physical proximity. An underdeveloped infrastructure in Vietnam, often criticized by foreign investors, has largely been improved as an artery for distribution across Indochina was provided along with the completion of a freeway between Nanning, the capital of the Guangxi Zhuang Autonomous Region, and Youyiguan near the border with Vietnam, in December last year. This has resulted in a shorter journey time between Guangzhou and Hanoi of about 12 hours. Suddenly, possibilities have turned to reality in parts procurement from China, increases in exports, and Vietnam being seen as a “capable of sharing risks being taken by other countries.”