RoK investors still see appeal and potential in Vietnam
What are your thoughts on the economic and trade relationship between Vietnam and RoK in the 30 years since diplomatic relations were established in 1992?
Economic and trade relations between the two countries have developed strongly over the 30 years since diplomatic relations were established. Thirty years ago, bilateral trade turnover was only $500 million, but hit more than $80 billion by 2021, or 160 times higher. And the figure is expected to surpass $100 billion by 2023. So the strong relationship between Vietnam and RoK has been demonstrated through the scale of economic development as well as the impressive figures in bilateral turnover.
In the first eleven months of 2022, RoK ranked third among 97 countries and territories investing in Vietnam, with capital of more than $4.6 billion. What do you think about these numbers?
As of November 2022, RoK had the largest volume of FDI capital in Vietnam. However, 2022 has been quite a difficult year for Korea, because the world economy has experienced many fluctuations and the exchange rate for the Won has fallen. When investors build factories or pump money into the real estate sector, they need to raise capital from financial institutions, and interest rates are rising around the world. This has created certain difficulties in the short term for Korean investors investing abroad in general and in Vietnam in particular. However, the current exchange rate for the Won is becoming more stable and interest rates are also showing signs of falling. I expect there will be more Korean investors interested in Vietnam.
How would you assess Vietnam’s investment environment for RoK businesses?
Compared to other countries in the world, Vietnam’s investment environment holds great potential for Korean business. The investment environment and culture in Vietnam bear many similarities to South Korea, which has attracted a lot of attention and offered convenience for Korean businesses and the Korean community in Vietnam. Bilateral relations and cultural exchanges between the two countries are therefore growing handily.
|Mr. Hong Sun, Chairman of the Korea Chamber of Business in Vietnam (KORCHAM).|
Samsung is planning to boost its investment in Vietnam to $20 billion in the near future. Overall, what are the investment trends being pursued by RoK enterprises in Vietnam?
Korean investment in Vietnam is special. For example, when Samsung invested in a mobile phone factory in northern Bac Ninh province in 2008, there were businesses in supporting industries that also came to Vietnam to invest with Samsung. And ten years on, more than 1,000 of the best global companies in supporting industries are present in Vietnam.
If Samsung continues to expand its investment in the country, there will be a lot of other companies in supporting industries from Korea and elsewhere investing in Vietnam. Investors will also continue to look for domestic suppliers in Vietnam to localize the component ratio. I hope there will more and more Korean corporations starting large-scale projects so that others can expand their investment in Vietnam.
What do RoK businesses need to do to promote their business and investment activities in Vietnam?
Korean businesses need to understand investment policies and understand Vietnamese culture when investing in Vietnam. The Vietnamese Government should also create favorable investment conditions and prioritize investment in infrastructure, and have stricter legal frameworks in line with international standards so that investors feel secure when investing.
For example, the US offers many preferential policies and tax incentives for foreign investors in manufacturing semiconductors, car batteries, or high value-added products. When conducting business in Vietnam, Korean investors pay great attention to exporting their products to foreign countries. For example, 98 per cent of Samsung’s production in Vietnam is exported to other countries, and this is a very good thing for Vietnam in terms of growth in technology and the country’s economy in the long term. Therefore, Vietnam needs to adopt more attractive preferential policies for investors, to promote foreign investment in the country.