As of the end of the first quarter of 2021, Korea had been holding the number one position among the countries and territories investing in Vietnam with a total of more than 9,000 valid projects and a total registered capital of over 71.5 billion USD, accounting for 18.1% of total foreign investment capital (FDI) in Vietnam.
Statistics of the Foreign Investment Agency shows that more and more Korean investors are interested in the Vietnamese market, especially in the fields of processing and manufacturing industry, real estate and recently the field of high technology and green development. Korean businesses also want to participate in large-scale infrastructure projects of Ho Chi Minh City.
In terms of trade, in 2020, South Korea was Vietnam's third largest trading partner with two-way trade turnover reaching 66 billion USD. Particularly for Ho Chi Minh City, South Korea was the 5th largest export market with export turnover reaching approximately 1.8 billion USD in 2020.
According to Mr. Kim Heung Soo - Chairman of the Korea Chamber of Commerce and Industry (KOCHAM), Korea in particular and countries around the world in general highly appreciate how the Vietnamese Government has drastically responded to the Covid-19 pandemic. This helped Korean enterprises, despite difficulties, could still operate normally in 2020. Although the Covid-19 pandemic has affected the global economy, Korea still maintains its first position regarding total investment capital in Vietnam. In the context that the Covid-19 epidemic is still raging at the moment, Korean enterprises are expected to continue to invest in Vietnam in the future.
Besides the amount of capital, Korea is increasingly becoming an important investment partner of Vietnam because the investment capital flow from this country is exactly in line with the strategic goal of attracting FDI capital of Vietnam. Korean businesses have been present in all economic sectors of Vietnam's economy, from apparel to electronics, infrastructure to energy, automobiles to aerospace, real estate to finance and banking, etc., thereby contributing to the economic restructuring, and promoting Vietnam’s key economic sectors. In addition, the huge number of Korean companies in Vietnam have created jobs for over 700,000 workers.
Korean capital flow into Vietnam is divided into several stages. The first stage is associated with labor-intensive investment projects and the production of electronic components and equipment. The next phase will but focus on indirect investment. Korean companies have contributed capital to buy shares in many Vietnamese companies. For example, SK Group invested 1 billion USD in Vingroup and 470 million USD in Masan Group, or KEB Hana Bank bought 15% of BIDV's charter capital. So far, there have been nearly 16 financial companies that are members of the Finance Association (KOFIA) operating in Vietnam in the field of stock trading with total investment up to billions of dollars.
More and more Korean corporations operate in the immediate financial field in order to provide financial services to Korean enterprises and large Vietnamese corporations thanks to a large customer network in Vietnam. Therefore, finance – banking industry is forecasted to receive a strong investment wave from Korea in the near future to support more than 9,000 Korean enterprises operating in Vietnam when their contribution to Vietnam’s economy exceeds 30%. In addition, Korean businesses will invest heavily in the field of financial technology (fintech) if the Vietnamese Government soon completes the legal framework for this field.
According to the analysis of experts, that Korean businesses continue investing in the Vietnamese market in the coming time can be explained by the openess and stable development of Vietnam's economy. In particular, Vietnam has been implementing the commitments of the new-generation free trade agreements including the CPTPP, EVFTA and RCEP. These agreements cover about 60 economies, which are key trading partners accounting for 90% of Vietnam's trade turnover, promising to create new driving forces for Vietnam's economic growth in general, and opportunities to create a growth breakthrough for Korean FDI enterprises in Vietnam in particular.
Source: investvietnam
Compiled by VietnamCredit
