New expectations about Korean in Vietnam

Monday, 2019-12-16 10:29:44
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A Samsung manufacturing complex in Thai Nguyen province (Photo: Samsung)
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NDO - As of November 2019, the Republic of Korea (ROK) remained the largest foreign investor among the 132 countries and territories investing in Vietnam, at US$66.82 billion, accounting for 18.5% of total foreign investment in Vietnam.

The vast Korean investment is manifested not only in the number of newly registered projects 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 manufacturing, 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 too familiar.

Along with the investment flow, Vietnam’s imports from the ROK have also increased rapidly because Korean firms use their investment in Vietnam to import machinery, equipment and materials to serve their manufacturing in Vietnam. Vietnam and the ROK are aiming to raise bilateral trade from US$65 billion in 2018 to US$100 billion in 2020.

With its new southern policy, the ROK is now one of the top ten outbound investors in the world. The need for a destination to replace China is driving Korean businesses to Vietnam.

Korean enterprises are stepping up opening offices, building factories, establishing joint ventures, purchasing shares at Vietnamese enterprises in order to realise investment opportunities through both direct and indirect investment.

An increasingly improved business environment, cheap labour, a golden population, high economic growth and political stability are the reasons causing Vietnam to become an attractive destination in the eyes of Korean investors.

Experts said that, during the process, Vietnam is compared to a “fulcrum” for Korean firms to maintain their global competitiveness. For the Vietnamese side, the country places high expectation on new Korean investment, especially in advanced technologies, new technologies, renewable energy, smart city development and agriculture. The question is what Vietnam should do to take advantage of the new opportunities and join the ROK’s global manufacturing network.

In order for Korean investment in Vietnam to become more substantive, 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.