South Korean investors remain upbeat on Vietnam potentials
South Korean investors remain upbeat on Vietnam potentials
Vietnam will continue to be a promising investment destination for South Korean companies, given its manufacturing potential, says a Korean Chamber of Commerce official.
A person walks by Lotte Tower in Hanoi. Photo by Shutterstock/Vietnam Stock Images.
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Many South Korean companies are considering expanding their investments in Vietnam because they are optimistic about the country’s prospects after its success in handling the Covid-19 pandemic, said Sun Hong, secretary general of the Korea Chamber of Commerce in Vietnam (Korcham).
Although Vietnam has experienced a new outbreak in several localities, the number of infectees is still small compared to other countries; and the government’s determination to contain the spread of the novel coronavirus gives foreign investors confidence that the business environment remains stable, he told VnExpress.
Since Samsung entered Vietnam in 2008, the number of South Korean suppliers has been rising and now stands at over 1,000, according to Korcham data.
South Korea was the second largest foreign investor in Vietnam last year with a total registered capital of over $3.95 billion, behind Singapore, according to the Ministry of Planning and Investment.
Big corporations like LG and Lotte are also either directly investing in the country or partnering with Vietnamese businesses. They are expected to continue expanding their Vietnamese operations.
Although 70 percent of South Korean capital in Vietnam is in the manufacturing sector, many firms from the country have been increasing investments in finance, securities and insurance and real estate sectors.
South Korean companies have also evinced interest in renewable energy with Vietnam having a large demand for power.
Sung Hong said 2020 was a challenging year for South Korean businesses in Vietnam, as small and medium businesses in tourism and hospitality were severely hurt by extensive flight restrictions.
The services sector also suffered with many restaurants seeing revenues plunging 50-90 percent year-on-year. There were businesses that posted big losses and had to sell their assets, he added.
However, overall, South Korean investors in Vietnam remain optimistic, Hong said. Last year, when many large economies faced issues with their supply chains due to the novel coronavirus, most Vietnamese manufacturers were able to recover quickly.
The trade pacts that Vietnam has signed last year, including the Regional Comprehensive Economic Partnership (RCEP) and the Vietnam - U.K. Free Trade Agreement (UKVFTA), will foster growth for manufacturing companies and will make the country rise as a factory for the world, partly replacing China in this role, he said.
In order to attract more South Korean capital, Hong suggested that Vietnam remains open to free trade agreements as they will attract foreign investors who seek to use the country as a manufacturing base to export their products globally.
Improving the business environment should be another priority. With administrative approvals currently taking a long time, more transparent procedures and speedy implementation will make businesses feel more confident about investing in the country, he added.
