Healthy status for Korean investment into Vietnam

Healthy status for Korean investment into Vietnam

A continued large trade deficit with South Korea has mirrored a major contribution from a rise in this country’s investment into Vietnam.

According to the latest figures released last week by the National Statistics Office, South Korea is now Vietnam’s fourth-largest trade partner, after China, the US, and ASEAN.

The Vietnam-South Korea trade turnover in the first six months of this year reached $42.1 billion, up from $38.4 billion in the same period last year. This included $13.7 billion worth of Vietnamese exports, up 11.9 per cent on-year, and $28.4 billion of South Korean exports, up 5.5 per cent as compared to the corresponding period last year.

Total trade deficit for Vietnam in this period sat at $14.7 billion, up from $4 billion last year.

However, the trade deficit situation is stable as Vietnam is an increasingly attractive investment destination for South Korean investors who have had to import many kinds of materials for production from their home market into Vietnam, where such materials cannot be produced directly due to a weak supporting industry.

Last year, both nations’ total trade turnover reached $81.7 billion. Vietnam’s exports to South Korea came in at $25.5 billion, accounting for 6.28 per cent of the former’s total export turnover. Meanwhile, Vietnam’s imports from South Korea stood at $56 billion, occupying 14.76 per cent of Vietnam’s total import value. The total deficit reached $30.5 billion.

According to Vietnam Customs, the key item groups that were imported the most last year from South Korea includes computers, electronics, and spare parts ($31.9 billion – up 11 per cent on-year); and machinery and equipment ($5.26 billion – down 3.2 per cent). Other groups consisted of assorted petrol and oil, plastic materials, assorted clothes, ordinary metals, steel, vehicle spare parts, and mobile phone and spare parts, among others. All these figures recorded an on-year increase.

According to the Vietnamese Ministry of Industry and Trade (MoIT), these imported items do not compete with those in Vietnam where many of similar items are not produced, and they are all used for domestic production in Vietnam, not luxury items.

Figures from the Vietnamese Ministry of Finance’s Foreign Investment Agency showed that cumulatively as of late June, South Korea was the biggest foreign investor in Vietnam, with nearly 10,240 valid projects registered at $93.73 billion. In the January-June period, total newly registered and newly added capital and stake acquisition and capital contributions from South Korean investors in Vietnam hit $3.08 billion, up 107.2 per cent on-year.

Kim Nyoun-Ho, chairman of the Korean Chamber of Commerce and Industry, said that Vietnam has participated in global supply chains through various free trade agreements, rapidly enhancing the competitiveness of its key export industries, including coffee, rice, electronics, textiles, footwear, and furniture. Infrastructure development in transportation, ports, and energy has also driven growth.

“Vietnam has established itself as a strategic central nation in ASEAN and is expected to become a vital link in global supply chains within the next decade,” Ho said. “New airports, ports, highways, and railways will provide the foundation for this role. Vietnam is preparing to transition from a manufacturing powerhouse to playing a major role in global value chains through digital and eco-friendly industries.”

At a dialogue in March in Hanoi between Prime Minister Pham Minh Chinh and representatives of 35 South Korean corporations and businesses, Ko Tae Yeon, chairman of the Korea Chamber of Business in Vietnam, said Vietnam attracted impressive foreign direct investment inflows despite global economic challenges, including $7 billion from South Korea in 2024, up 37.5 per cent on-year, bringing South Korea’s cumulative investments in Vietnam to $92 billion.

Currently, around 10,000 South Korean businesses are operating in the country, generating over 900,000 jobs and making significant contributions to the national socioeconomic development.

“These achievements reaffirm Vietnam’s important position and role in the global supply chain, reflecting the strong growth of Vietnam-South Korea cooperation,” Yeon said.

Both countries are making efforts to soon raise the bilateral trade turnover to $100 billion, with a vision to reach $150 billion by 2030. To this end, Vietnam welcomes all South Korean investments into key and high-tech industries such as semiconductors, digital transformation, green and circular economy, renewable energy, and AI.

Currently, Vietnam is deemed a destination full of potential for South Korean companies. For example, conglomerate SK Group is exploring the possibility of investing in a landmark $2.1 billion liquefied natural gas power plant in the central province of Nghe An.

Youngwook Yoo, vice chairman of SK Innovation E&S, said SK Group is currently conducting parallel feasibility studies for two major power projects: the Quynh Lap development in Nghe An and another in Thanh Hoa province.

The Quynh Lap plant will have an installed capacity of 1,500MW (two units of 750MW each) and an estimated total investment of $2.11 billion. It will include a liquefied natural gas (LNG) receiving terminal for vessels of 100,000–150,000DWT, a regasification system, and synchronised infrastructure. The projected annual LNG import volume is 1.15 million tonnes.

The project is listed among the key power generation initiatives prioritised for implementation under the nation’s power development plan. The facility is expected to be operational before 2030, contributing to Vietnam’s clean energy targets while ensuring grid reliability.

Additionally, Samsung – the largest South Korean investor in Vietnam - also plans to invest more in Vietnam over the next years. Samsung Electronics is reported to have already invested $23.2 billion in Vietnam so far and incorporated hundreds of Vietnamese companies into its supply chain.

In 2024, Samsung Vietnam’s six factories earned a revenue of $62.5 billion, with total export turnover of $54.4 billion. The group is using about 87,000 Vietnamese workers, including over 45,000 working in the northern province of Bac Ninh. Vietnam now produces half of Samsung smartphones.

VIR