The wave of Korean investment in Vietnam is continuing as the Southeast Asian nation is considered a favorable destination for Korean capital flow, according to the Korea Trade and Investment Promotion Agency (KOTRA).
| Many Korean corporations have wished to expand their investment in Vietnam. |
KOTRA reported that Korean firms have high hopes for Vietnam’s growth potential and highly evaluate the skills and diligence of workers.
In a recent forum in Seoul, Korean Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki suggested Korean firms grasp opportunities to invest in Vietnam as the two countries’ relationship is in a flourishing period.
As Vietnam is the core partner in the New Southern Policy of Korean President Moon Jae-in, many Korean corporations and investors have also looked to expand their investment in the Southeast Asian nation in retail, automobile, supporting industry, high-tech agriculture, environmentally friendly electronic and gas production, as well as banking.
A recent survey conducted by KOTRA showed that more than 90% of Korean firms are satisfied with their investments in Vietnam.
According to Korean garment-textile company Naturon Co., Ltd, Vietnam has posted high and stable economic growth for many years, and has a young and dynamic population.
Korean investment in Vietnam has expanded over the years with a rise of 37% each year, making Korea the largest foreign investor among the 132 countries and territories investing in Vietnam, at US$67 billion by the end of November 2019. Vietnam is also South Korea’s biggest investment recipient among ASEAN countries.
The vast Korean investment is manifested not only in the number of newly registered or large-scale projects but also in the fields of investment. Previously, Korean investment was mainly concentrated on production-export but recently Korean investment has shifted strongly towards banking and finance, services, entertainment and property.
More and more giant Korean corporations such as SK, KEB Hana Bank are present in Vietnam while names such as LG, Samsung, KIA and Lotte have become all familiar in the country.
Korean enterprises are stepping up opening offices, building factories, establishing joint ventures, purchasing shares at Vietnamese enterprises in order to realize investment opportunities through both direct and indirect investment.
According to experts, the most important advantage South Korean investors can count on when investing in Vietnam is the fondness and trust Vietnamese people have for South Korean brands. Another major advantage for investors is the many similarities in values and preferences between Vietnamese and Koreans.
Taking actions
The Vietnamese government now also places high expectation for new Korean investment, especially in advanced and new technologies.
During the forum in Seoul, Prime Minister Nguyen Xuan Phuc said that Vietnam will continue to support foreign enterprises, including Korean companies, to invest and set up operations in the country.
PM Phuc called for Korean firms to invest in Vietnam’s processing and manufacturing sector, auxiliary industry, renewable energy and fintech, as well as in industries that Korean firms held competitive advantages such as logistics and shipbuilding.
In addition, he urged the two sides to strengthen co-operation in the fields of education and healthcare with the objective of building state-of-the-art medical facilities in Vietnam.
However, in order for Korean investment in Vietnam to become more substantive, experts said that it is necessary to continue removing economic bottlenecks by stepping up business environment reform, developing infrastructure, enhancing workforce quality, and fine-tuning the legal system in a way that is consistent, transparent, predictable and in accordance with international standards. In addition, policies are needed to attract large-scale projects with new technologies and highly competitive products.
