Spike predicted in Korean investment
Spike predicted in Korean investment
South Korean direct investment inflow to Vietnam is expected to soar in the near future, as businesses scramble to capitalise on the recently-signed free trade agreement between the two countries.
“We see multiple opportunities arising from the recent ratification of the free trade agreement (FTA) between our countries, which is why we have chosen to build our factory in Vietnam,” said Kim Duk Yong, chairman of KMW - South Korea’s biggest maker of telecommunications and LED lighting equipment. He made this statement at a recent groundbreaking ceremony for its $100m manufacturing plant in the northern province of Ha Nam.
At the ceremony, Vietnamese Deputy Prime Minister Hoang Trung Hai and South Korean Ambassador to Vietnam Jun Dae Joo said they both anticipated a jump in South Korean investment to Vietnam after the recent signing of the bilateral FTA.
According to Hong Sun, general secretary of the Korean Chamber of Commerce in Vietnam, in addition to industry, agriculture is also expected to receive a lot of attention from Korean investors.
“Many South Korean investors want to step into Vietnam’s agriculture sector, and so the number of investors may spike following the signing of the bilateral FTA. Through their operations in Vietnam, South Korean investors will export products back to South Korea to cash in on low tariff rates arising from the FTA,” said Sun.
“In addition, the bilateral FTA allows very low tariffs for Vietnam to import garment materials and accessories from South Korea, this will inspire Korean firms to further pump up their investment in this field for export back to South Korea and other markets,” he added.
His comment has been backed up by a string of new South Korean investment projects in Vietnam’s textile and garment sector over recent months. For instance, earlier this month, authorities in the southern province of Dong Nai granted an investment certificate to Hyosung Dong Nai - part of Hyosung Corporation - to invest more than VND14 trillion ($660 million) to build a fibre production plant on 22 hectares in the province’s Nhon Trach 5 Industrial Zone.
A textile-garment-dyeing factory valued at $30 million invested in by the South Korean garment and textile group Panko was licensed not long ago in the central province of Quang Nam.
Other projects include In Kyung Apparel’s $5.1 million project, a $20 million project by S&H Vina, and an $8.5 million project by Viet Pan-Pacific in the north-central province of Thanh Hoa, to name just a few.
Meanwhile, ACE Technologies Corporation - a Korean leader in the manufacture of radio frequency components, base station antennae, mobile antennae, repeaters, telematics, and future media concepts, last week was licensed to build a $60 million plant producing wireless antennae for smart-phones in Ha Nam.
“The ratification of the Vietnam-South Korea FTA will inspire Korean investors with delayed projects in Vietnam, and will convince those still unsure about their investment decisions to become more determined to invest in Vietnam,” said Nguyen Mai, chairman of the Vietnam Association of Foreign Invested Enterprises.
South Korea is currently Vietnam’s biggest foreign investor. As of April 20, 2015, South Korea’s total cumulative investment capital here surpassed $38.5 billion.
