Vietnam remains preferred investment destination for South Korean companies: KorCham

Vice President of the Korean Chamber of Commerce and Industry in Vietnam (KorCham) Hong Sun talked to The Hanoi Times about the strong economic ties between Vietnam and South Korea on the occasion of the 30^th anniversary of diplomatic relations (1992-2022).

KorCham Vice President Hong Sun.

South Korea has consistently been among the largest investors in Vietnam over the years. What is your view on this trend?

South Korea remained Vietnam’s largest foreign investor with 9,223 projects and accumulated registered capital of $74.7 billion as of the end of 2021. During the first six months of this year, the country ranked second with $2.66 billion, or 19% of total investment capital to Vietnam.

For me, this shows South Korean companies have always been prioritizing Vietnam as an attractive investment destination when going abroad, and those already in the country continue to maintain and expand their business operations.

Over the years, investment activities from South Korea to Vietnam have expanded beyond manufacturing to other economic sectors, both in direct and indirect investment, such as retail, finance insurance, real estate, services, and entertainment.

As Vietnam has now been a favorite destination for South Korean companies, I expect the investment trend would continue for many years to come.

It is understandable why the country is appealing to foreign investors, especially those from South Korea, as the country boasts a high-quality workforce, similarities in culture, and the two countries’ proximity.

Vietnam has now revised its FDI attraction policy to focus on quality projects of high added value, spillover effects, and are environmentally friendly. How has the FDI to Vietnam changed over time?

While South Korean companies have been investing in Vietnam in diversified economic sectors, the electronics industry remains the highlight. Since Samsung made its first investment in the country in 2008, a host of South Korean companies have followed, such as LG, SK, Posco, and Lotte, among others.

I anticipate there would be more South Korean conglomerates in different sectors, including banking insurance, venture capital, and securities, to explore and search for investment opportunities in Vietnam, which is significant taking into account the current difficult global economic environment, especially the severe consequences of the Russia – Ukraine conflict, high inflationary pressure, and risks of disruption to the global value chains.

Samsung is currently the largest foreign investor in Vietnam with a total capital commitment of US$19.2 billion.

What is your view on Vietnam’s current policies for foreign businesses?

One of the most significant factors for foreign companies is the tax incentive policies of the host country. So not only Vietnam but also its neighbors, such as Indonesia, the Philippines, and Thailand, are offering significant incentives to attract foreign investors.

In the case of Vietnam, the Government should continue to improve the business environment along with a favorable legal environment, including simplification in administrative procedures related to foreign companies or experts living in the country.

Such is the way forward for Vietnam to maintain its status as an attractive investment destination and meet the expectation of investors.

At a time when both countries are celebrating the 30^th anniversary of diplomatic relations, what are your expectations for the economic cooperation prospects in the next phase, seen as a key pillar in Vietnam-South Korea relations?

Vietnam-South Korea relations have gone from strength to strength over the past 30 years. As we reach this significant milestone, there should be a long-term strategy to map out the vision and objectives for this partnership in the next 30 years.

As such, we need experts and policymakers from both sides that have a deep understanding of the relations to work on this important task.

KorCham as a representative agency for the South Korean business community in Vietnam would continue to listen to their concern and recommendations and forward to the Vietnamese agencies to address any issues that arise, and also to push for bilateral relations, and find new spaces to expand this strong partnership.

Thank you for your time!