Vietnam expects a new wave of foreign direct investment (FDI) from the Republic of Korea (RoK) in the wake of the recently signed bilateral free trade agreement (FTA).
The RoK surpassed major investors from Japan and Singapore to become the biggest investor in Vietnam with hundreds of projects in 2014 and the first four months of this year.
The RoK’s Hyosung group, with two investment projects worth US$995 million in southern Dong Nai province, has received an investment licence to implement an industrial yarn manufacturing project worth US$660 million in the province, the largest FDI project in Vietnam in January-April.
Many other giants from the RoK such as Lotte, Samsung, Kumho, and Taekwang plan to expand their operations in Vietnam, which helped to attract hundreds of foreign investors to the Southeast Asian country.
For example, Samsung manufacturing complexes in northern Bac Ninh and Thai Nguyen provinces lured nearly 100 RoK suppliers.
Most recently, the RoK’s ACE Technology met with authorities from northern Ha Nam province to discuss investment plans for a wireless aerial manufacturing plant for smart phones with a total capital of US$70 million.
According to the Ministry of Planning and Investment, Korean investment projects were previously carried out by small-and medium-sized enterprises, focusing on garments, textiles and footwear.
Yet in present day, more multinational RoK groups are investing in Vietnam in high technology, electronics, real estate, manufacturing and trade. They accounted for only 5 percent of RoK’s projects in the country but 70 percent of investment capital.
According to the Korean International Trade Association (KITA), the majority of Korean companies plan to expand business in emerging foreign markets in 2015 with Vietnam as the most favourite destination.
KITA’s survey revealed that 49 percent of the 540 Korean businesses surveyed about the investment climate in 32 countries confirmed that they plan to expand operations in Vietnam this year in anticipation of opportunities presented by the free trade agreement.
As of April 20 this year, RoK investors owned a total registered capital of over US$38.54 billion in 4,333 valid projects in Vietnam, according to the Foreign Investment Department under the Ministry of Planning and Investment.