The reason Korean businesses choose Southern Vietnam as a reliable investment destination
WVR - According to Mr. Choi Bundo, Chairman of the Korean Chamber of Commerce in Vietnam (KOCHAM), the southern region was an attractive destination for Korean investors, and Binh Duong was one typical industrial city concentrating many businesses of the "Land of Kimchi."
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| Mr. Choi Bundo, Chairman of the Korean Chamber of Commerce in Vietnam (KOCHAM). (Photo: NVCC) |
Can you share the current situation of Korean businesses in Southern Vietnam, Sir? Why do they choose Vietnam as an investment destination?
According to the Foreign Investment Agency (Ministry of Planning and Investment), by the end of 2023, Korea's total accumulated investment capital reached nearly 86 billion USD, with a total of 9,863 projects, accounting for 25.1% of total capital. To this result, Korea is the leading country among the total of 144 countries and territories in the world investing in Vietnam. Currently, 4,500 Korean businesses are operating in Central and Southern Vietnam. Thus, this region is quite an attractive destination for Korean investors.
I think Korean companies choose Vietnam, especially the Southern region, for many reasons as a reliable investment destination. For example, Vietnam has a stable political environment, a high economic growth, and an abundant young labor force. At the same time, the Vietnamese population is huge, more than 100 million people; their income levels and quality labor skills are constantly increasing... These are also attractive factors for Korean investors.
Additionally, Vietnam is located quite close to Korea. The reasonable cost of living in Vietnam and adequate facilities are convenient for investors to come here to work. Setting up offices in Vietnam is also advantaged because we can easily travel to major cities of Southeast Asian countries such as Singapore, Hong Kong (China), Bangkok (Thailand), Jakarta (Indonesia), Manila (Philippines), Phnom Penh (Cambodia) and Yangon (Myanmar) with the lowest cost and time, only about 2 hours.
Do Korean businesses face difficulties when doing business in the Southern region, Sir? What are your recommendations to overcome those difficulties?
The global economic situation has recently been full of difficulties and unpredictable fluctuations, significantly impacting Korean businesses and the Vietnamese economy. In my opinion, Korean businesses still face the following basic difficulties:
First, the delay in value-added tax (VAT) refunds is causing difficulties for foreign investors in Vietnam in the capital turnover process. Tax and customs inspection procedures greatly burden businesses during the crisis.
In Korea, when the economy fluctuates, we will conduct polls and surveys on the business situation and then provide flexible support measures to maintain business operations for businesses. This is necessary to help businesses quickly overcome difficulties and contribute to economic recovery.
Accordingly, Vietnamese government also needs to cooperate with the Associations who act as a bridge to understand the difficulties of investors, thereby, conduct reasonable legal policy improvements to create a favorable business environment.
Second, supporting the product industry is a matter. Among 1,800 parts and accessories manufacturers in Vietnam, only about 300 businesses have the right to participate in the global supply chain. This makes foreign-invested enterprises, including Korean investors, unable to find suitable manufacturers of raw materials and components for production after being licensed to invest in Vietnam and forced to import from abroad.
Vietnam is at a time when it must make a leap, not only providing simple raw materials and components but also raising this industry to a new level of development. To achieve this goal, I think it is necessary to establish policies at the government level to bring long-term benefits to companies investing in the production of materials, parts, and equipment in the supporting industry. This one will promote the overall development of Vietnamese businesses and foreign investors and support the long-term development of the economy.
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| KOCHAM regularly carries out CSR (corporate social responsibility) activities. The 20th KOCHAM charity night 2023 pictures (Photo: NVCC) |
Particularly in Binh Duong, what is the current situation of Korean businesses in this province? What fields do Korean businesses focus on in Binh Duong, Sir?
Binh Duong is one of the typical industrial cities in Southern Vietnam, where many Korean businesses are located. By the end of 2023, about 449 Korean companies are operating in Binh Duong - accounting for about 18% of Korean investors operating in Vietnam's Central and Southern regions.
According to data from the Ministry of Planning and Investment, in the first quarter of 2024, Binh Duong was only second to Ho Chi Minh City in terms of attracting FDI capital, about 10 million USD for an average size of each project, accounting for nearly 9% of the country's total investment capital, even surpassing Hanoi ranked the 3rd. This has proven the attraction of Binh Duong because of its positive economics, management ability, investment encouragement, and favorable business environment. This is the reason why Korean businesses choose Binh Duong as a destination.
Now, Korean businesses operating in Binh Duong not only focus on traditional fields such as textiles, footwear, and manufacturing but also aim to produce high-value products such as electricity, electronics, and auto parts...
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| Meet Korea 2024 event in Binh Duong will occur on May 16- 17. (Photo: BTC) |
What are your expectations about the Meet Korea 2024 event in Binh Duong on May 16-17th and the future cooperation between Korean businesses and the southern region?
Meet Korea 2024 is a series of events organized by the Ministry of Foreign Affairs in coordination with the Korean Embassy in Vietnam since 2015 to exchange situations, solutions, and proposals to promote the development of trade and investment, culture and tourism, and many other fields between the local businesses and Korean partners.
Following the success of previous events, Meet Korea will be held in Binh Duong this year. This is a great opportunity for Korean investors and businesses in the Southern region to meet, explore business opportunities, expand, and connect partnerships with Vietnamese businesses. At the event, Korean businesses will be able to learn more about the investment environment, key industries, and local companies in Binh Duong province and the Southern provinces.
On the other hand, businesses in Binh Duong and the Southern region will have a chance to explore cooperation opportunities to take advantage of Korean companies' technology, capital, and experience. The event is also an opportunity for provinces in the Southern region to promote economic diplomacy activities, widely promote the image of their provinces, attract foreign investment capital, and contribute to strengthening the relationship between the localities and Korean partners.
I hope that in the future, the cooperation between Korea and businesses in Vietnam and the Southern region, in particular, will become more positive, ensuring a mutually beneficial relationship. This also promotes the comprehensive strategic partnership between Vietnam and Korea.
Thank you so much, Sir!
| KOCHAM is an economic organization licensed by Vietnamese authorities and established in 2003. Among more than 4,500 Korean enterprises investing in Central and Southern Vietnam managed by Southern KOCHAM, more than 950 businesses are official members of the KOCHAM. KOCHAM's main roles are to protect the rights and interests of Korean businesses investing in Vietnam and to improve the business environment through connecting activities with local and central Vietnamese governments. It also aims to carry out diverse CSR social responsibility activities to help the community. |
