Vietnam remains favorite investment destination for South Korea amid Covid-19

While the FDI into Vietnam declined by 2.5% for the first half of the year, the country remained a favorite destination for South Korean investors with a surge in investment inflow of 43.6% year-on-year.

Samsung is one of the largest investors in Vietnam. Source: Samsung

Lee Jong Seob, president of the Korea Trade-Investment Promotion Agency (KOTRA) in Southeast Asia and Oceania cum general director of KOTRA Hanoi gave the remarks in an online conference discussing Vietnam’s economic outlook on August 4, which attracted nearly 200 South Korean companies.

“South Korea continues to be Vietnam’s largest foreign investor with an accumulated registered capital of $72 billion in 9,100 projects,” he noted.

Maintaining strong growth momentum of 2.9% last year, Vietnam stayed as the region’s fastest-growing economy in the January-June period with a GDP growth of 5.64%.

“With positive performance in both trading activities and FDI attraction, Vietnam is a prime example of high growth potential that South Korean companies could expand investment activities here,” Lee added.

This is not to say that there is a clear road for Vietnam going forward as the country is facing numerous difficulties from the fourth outbreak.

“Three months on since the fourth outbreak and with thousands of new daily Covid-19 cases, the country’s business environment is deteriorating and makes it hard for enterprises to operate, especially given the shortage of labor force, input materials, and rising logistics costs,” Lee continued.

According to Lee, a major concern for South Korean companies is entry procedures to Vietnam during this serious Covid-19 situation.

On this issue, WHO Representative in Vietnam Kidong Park said Vietnam’s strategy on the Covid-19 fight is in the right direction, urging South Korean companies to strictly comply with local authorities’ instruction to ensure safety during operation.

From August 4, Vietnam decided to cut short the quarantine period to seven days for people fully vaccinated or recovered from Covid-19 and another seven days for health monitoring.

Director of the Vietnam Trade Promotion Agency under the Ministry of Industry and Trade (MoIT) Vu Ba Phu said under this difficult period, the Vietnamese Government is determined to pursue the twin goal of both containing the pandemic and boosting economic growth.

“There have been Covid-19 clusters in industrial parks, but localities and management boards of industrial parks are in close cooperation to prevent disruption in production activities,” Phu added.

For the first seven months of this year, South Korea remained Vietnam’s fourth-largest export market with a turnover of $12 billion, up 10.3% year on year.

Vietnam, meanwhile, imported goods and products worth nearly $30 billion from South Korea, or a 20% increase.