Investment wave from Korean enterprises

A recent survey by the Korea Trade-Investment Promotion Agency (KOTRA) showed that 93 percent of Korean enterprises operating in Vietnam expressed satisfaction when investing in the country. They also considered investment environment in Vietnam to be highly open.

Food processing at the factory of CJ Group invested in Ho Chi Minh City. (Photo: SGGP)

Food processing at the factory of CJ Group invested in Ho Chi Minh City. (Photo: SGGP)

According to KOTRA, Korean enterprises have high expectations on Vietnam’s growth potential, of which, they highly appreciate the skills and diligence of workers. Vietnam is considered to be the most favorable investment destination and the wave of Korean investment will continue to come to Vietnam. Currently, around 90 percent of Korean investment projects was carried out by small and medium sized enterprises, mainly concentrating on industrial processing and manufacturing sector of light industries, such as garment and textile and footwear.

According to Naturon Co., LTD, a company in garment and textile sector, Vietnam is an economy with high and stable growth rates for many years, the Vietnamese population is mostly young and dynamic people. Therefore, Vietnam is considered as a potential business market of Korean enterprises.

The new Southbound policy of Korean Government has determined that the ASEAN in general and Vietnam in particular is one of the markets prioritized by South Korea. Especially, after the Vietnam-Korea Free Trade Agreement became effective in 2015, trade between the two countries has increased significantly. The relationship between the two nations has been strengthened and more comprehensive, not only in trade but also in investment and services.

Regarding quality, Korean investment projects meet quite well the goals of foreign investment attraction of Vietnam in each period. Besides satisfying capital for growth, projects from South Korea also have fairly high technology, support development of human resources, create spreading and participate in export production value chains of domestic enterprises.

It can be seen that Korean enterprises invest in Vietnam on a wide range, from billion-US-dollar projects to super-small ones. Previously, electronic components sector was the main sector interested by Korean investors. Now, other sectors, including retail, finance, green energy and real estate, have also attracted a large amount of capital from South Korea.

Especially, recently, the industrial food processing industry has lured lots of Korean investors. For instance, CJ Group has respectively raised its ownership ratio at large Vietnamese food processing enterprises, namely Cau Tre Export Joint Stock Company and Minh Dat Company.

According to Mr. Vo Tan Thanh, vice chairman of the Vietnam Chamber of Commerce and Industry, the Government will focus on completing general policy for foreign investment attraction, enhancing state management and promoting investment in the spirit of positive and proactive international integration, of which economic integration is the focus.

Vietnam will have a high incentive mechanism for projects with modern technology, environmentally friendly, good management skills and ready to connect with domestic enterprises. This will be an opportunity for Korean enterprises to expand their investment in the Vietnamese market, especially in the fields which South Korea has strengths such as supporting industry, technology and components manufacturing.

Vietnam has always had a big trade deficit from South Korea. To equilibrate the trade balance, the governments of the two countries are seeking solutions to export more of goods that Vietnam has advantages to Korea such as garments, textiles, footwear, seafood and wooden products. At the same time, Vietnam will create a more favorable environment for Korean enterprises to invest in the production of auxiliary products and semi-finished products in Vietnam for domestic consumption and export.

By Minh Hai – Translated by Bao Nghi

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