Many suppliers from the Republic of Korea (RoK) have followed Samsung, LG, Lotte, Emart and other major companies to set up shop in Vietnam in recent years, resulting in a sharp rise in Korean investment activity.
Data of the Foreign Investment Agency (FIA) showed Korea took the lead in terms of foreign direct investment (FDI) pledges in Vietnam and accounted for nearly 30% of total FDI approvals last year.
The agency under the Ministry of Planning and Investment said firms from the Northeast Asian country registered a total of US$6.72 billion for 702 new and 260 operational projects last year.
Besides an improving investment environment and the signing of free trade agreements (FTAs), experts said Vietnam, riding on the success of big-ticket projects of Korean giants, has wooed more Korean investors.
At the end of last year, Samsung Electronics HCMC CE Complex Co. Ltd. registered an additional US$600 million for its electronic and household appliances production project at Saigon Hi-Tech Park (SHTP). Samsung has pledged US$2 billion for for the project whose first phase is scheduled to be up and running this year.
The project has helped bring more Korean investors to SHTP, especially suppliers of Samsung. A number of suppliers have committed to pour hundreds of millions of U.S. dollars into their projects at the park in HCMC’s District 9.
Tens of Korean firms have decided to set up shop in Vietnam to produce parts for the US$1.5-billion project of LG Electronics (LG) in Haiphong City.
Vietnam’s retail sector has also drawn much attention of Korean firms. Buoyed by the success of Lotte Group in its Lotte Mart supermarket chain in Vietnam, more Korean companies have come to this growing market.
Shinsegae Corporation has inaugurated its first hypermarket called Emart in Vietnam after five years of consideration. Having a total investment of some US$60 million, Emart Go Vap in HCMC consists of a 6,000-square-meter supermarket and areas for catering and recreational services.
The retailer, which acquired 16 Wal-Mart stores in the Korean market in 2006, has 160 stores in Korea. It is seeking approval to open the second Emart in HCMC in the outlying district of Tan Phu.
Choi Kwang Ho, general director of Emart Vietnam, said Emart looks to have 10 stores in Vietnam by 2020.
Young-Jun Cho, head representative of the Korea Chamber of Commerce and Industry (KCCI) in Vietnam, told the Daily earlier that successful investment activities of firms like Samsung, LG, Emart and Lotte are a source of encouragement for many of their suppliers to come here.
For instance, nearly 100 suppliers of Samsung have entered Vietnam since the giant built up its manufacturing complexes in the nation’s northern region. Samsung plans to inject billions of U.S. dollars in its projects here in the coming years.
Besides new investors, Vietnam has atracted more investment from Korea as many Korean businesses in the sectors of commerce, service and production like CGV, Doosan, CJ and Kumho have expanded operations.
Park Noh Wan, Consul General of the Republic of Korea in HCMC, said Korean investments in Vietnam would keep soaring in the future on the back of the bilateral FTA between the two countries and Vietnam’s involvement in more major trade pacts including the Trans-Pacific Partnership (TPP).
Cho of KCCI said many Korean companies have shown interest in Vietnam’s market thanks to this ASEAN nation’s deeper international integration commitments.
Cho forecast that apart from the manufacturing sector, Korean investments in the electronics, logistics and retail sectors would continue to jump in.
Import tariff reductions in line with the FTA will encourage Korean businesses to strengthen their position in Vietnam, said Hong Sun, general secretary of the South Korean Business Association.
Nguyen Noi, deputy head of the FIA, said the FTA will support Vietnam to improve the business environment and attract more Korean investors.
Speaking on the sidelines of the Korea-Vietnam Job Fair for Global Talents 2015 in HCMC last month, Park Sang-Hyup, head of the Korea Trade Investment Promotion Agency (KOTRA), said Korean investment in Vietnam would continue growing strongly as a result of Vietnam’s participation in the TPP.
Korean investment in textile and apparel projects in Vietnam is poised to shoot up as well because Vietnam as a member state of the TPP will enjoy low or no tariffs when its textiles and garments are exported to other TPP countries, especially the United States.
A survey of the Korea International Trade Association (KITA) of 32 markets showed 49% of nearly 540 participating Korean firms said they have business and investment plans in Vietnam.
Korea was the biggest investor among 110 countries and territories having FDI projects in Vietnam. Korean firms are involved in 4,944 projects worth a combined US$44.9 billion.
