Welcoming a new wave of South Korean investment in Vietnam.

• The South Korean President begins his state visit to Vietnam.

• South Korea and Vietnam embark on a new chapter in their bilateral cooperation.

Is this the beginning of a wave of migration to Vietnam ?

For three days (June 22-24), South Korean President Yoon Suk Yeol and his wife paid a state visit to Vietnam at the invitation of President Vo Van Thuong. Notably, accompanying the South Korean Prime Minister was a delegation of 205 South Korean businesses from various sectors such as distribution, finance, law, healthcare , information technology, and services. Among them were the chairmen and senior leaders of leading South Korean corporations that have invested and done business in Vietnam , including Samsung Electronics, SK, Hyundai Motor, LG, Lotte, Hyosung, Hanwha, and Hanjin.

Samsung will mass-produce semiconductor wafers in Vietnam.

South Korean Ambassador to Vietnam Oh Young Ju stated that this was the largest business delegation among President Yoon Suk Yeol's recent overseas visits. This demonstrates the rapid and impressive development of economic , investment, and trade cooperation between South Korea and Vietnam .

Associate Professor Nguyen Thuong Lang, from the Institute of International Trade and Economics, expressed his admiration for the more than 205 Korean businesses that visited Vietnam on this occasion. He said: "The most impressive thing is the large number of Korean business delegations coming to Vietnam , covering core sectors of Korea, or more accurately, sectors where the country has strengths. In March, 50 large businesses from the US came to Vietnam to discuss investment and business cooperation. As a result, by the end of May, several major companies had already established themselves in Vietnam . Apple opened an online store selling to Vietnamese customers, and Boeing affirmed its intention to invest in the supply chain for parts and cooperate in several specialized areas such as helicopters and transportation…"

ECONOMIC NEWS on June 23: Expectations of a wave of investment from South Korea | China pumps $72 billion into electric vehicle ambitions.

"Of course, it wasn't the March trip that was effective, but the May trip that yielded results. However, it was thanks to the trips of investors, even diplomatic ones, to these important events that served as a foundation and created an effective impetus for the subsequent wave of investment. Moreover, Vietnam has long been a global production hub for many leading Korean corporations. Therefore, it can be said that this trip was crucial, marking the beginning of a wave of Korean investment shifting to Vietnam if Vietnam demonstrates the necessity of actively attracting investment and other resources from Korea," Associate Professor Dr. Nguyen Thuong Lang emphasized.

Hyundai (South Korea) car manufacturing in Vietnam

FDI capital increased more than 20 times in 10 years.

Compared to 10 years ago, in 2013, investment from South Korea into Vietnam was only $3.8 billion, but now it has skyrocketed to over $80 billion, a 21-fold increase. At the end of 2022, Vietnam and South Korea issued a Joint Statement upgrading their relationship to a Comprehensive Strategic Partnership, officially opening a new chapter in bilateral relations.

Many South Korean businesses have been successful in Vietnam.

This is a win-win meeting. Investors need to find new markets and expand opportunities in a Southeast Asian country undergoing remarkable reforms; Vietnam, on the other hand, values ​​innovation and the semiconductor industry, areas where South Korea has strengths. From the perspective of leveraging each other's advantages, practical and open negotiations and exchanges are essential. Both sides benefit from the presence of large, long-established South Korean investors who have continuously expanded their investments and achieved great success in Vietnam .

Associate Professor Dr. Nguyen Thuong Lang

Many financial institutions are looking to invest billions of dollars in Vietnam.

Korean businesses expect President Yoon's visit and talks with Vietnamese leaders to open up new avenues of cooperation and address difficulties faced by foreign investors, including Korean investors, amidst challenging global economic conditions. Furthermore, businesses from both countries are expected to sign major projects in energy, industrial parks, and residential areas. Many Korean financial institutions are also looking to invest in Vietnam with multi-billion dollar projects. (Mr. Hong Sun)

(Chairman of the Korean Chamber of Commerce in Vietnam - Korcham)

Details of the visit have not been disclosed, but according to South Korean media reports, the delegation is expected to sign several memoranda of cooperation during the three days. Leading South Korean businesses are seeking to secure supply chain cooperation and expand exports. In fact, the aforementioned large South Korean corporations already have factories or large-scale investment partnerships in Vietnam . Many corporations are still planning to expand. Among them, Samsung is not only the largest South Korean investor but also the largest foreign investor in Vietnam .

At the end of 2022, Samsung inaugurated its largest R&D (research and development) center in Vietnam , and Samsung Electronics achieved export turnover of $65 billion in Vietnam , accounting for more than 9% of the country's total export turnover. More than 60% of Samsung phones sold globally are manufactured and assembled at the group's factories in Vietnam . The company has planned to invest an additional $3.3 billion in Vietnam , of which $2 billion has already been invested in projects in Thai Nguyen and Ho Chi Minh City. It is expected that by the end of this year, Samsung will begin mass production of semiconductor chip grids at its factory in Thai Nguyen.

Similarly, LG Group plans to invest an additional $5 billion in Vietnam in the near future; Lotte Group is in the final stages of completing Lotte Mall Hanoi and building the Lotte Eco Smart Thu Thiem complex; SK remains a major foreign investor in two large Vietnamese corporations, Masan and Vingroup; Hyundai Motor inaugurated its second factory, Hyundai Thanh Cong No. 2, in Ninh Binh at the end of last year…

Recently, on June 12th, at the Hai Phong - South Korea Investment and Trade Promotion Conference 2023, held in Seoul (South Korea), the leaders of Hai Phong City awarded investment registration certificates to four projects with a total investment capital of 230 million USD: Bumhan Vina Heavy Industries - Nam Dinh Vu, Haewon Vina Co., Ltd., Hala Electronics Vina Co., Ltd., and EST Vina HaiPhong Co., Ltd. They also signed cooperation agreements for the future with a committed investment capital of up to 1.5 billion USD.

Vietnam is becoming an attractive destination for Korean businesses.

It can be said that South Korean investment in Vietnam has increased continuously and steadily over the years. In 2022, due to the global economic downturn and the impact of geopolitical conflicts around the world, FDI from South Korea into Vietnam decreased, but it remained a partner with new investment decisions and increased expansion. In particular, while some foreign investors scaled back, investors from South Korea continued to accelerate expansion and apply for new licenses in Vietnam . Specifically, South Korean investors accounted for 20.4% of new projects, 32.6% of project adjustments, and 34.1% of capital contributions and share purchases.

Economist Dr. Vo Tri Thanh, Director of the Institute for Brand and Competition Strategy Research, commented that a large delegation of over 200 Korean businesses visiting Vietnam this time shows that Vietnam's investment environment has very attractive factors for investors. Notably, this delegation includes many high-quality investors.

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The visit highlighted economic ties with Vietnam.

An article published in The Korea Times on June 22nd reported on President Yoon Suk Yeol's visit to Vietnam.

Screenshot from The Korea Times

KBS television, Arirang TV, Yonhap News Agency, and several major South Korean newspapers such as The Korea Times and The Korea Herald yesterday simultaneously reported and published articles about South Korean President Yoon Suk Yeol's visit to Vietnam .

According to KBS, citing an announcement from the South Korean President's Office, during President Yoon's visit to Vietnam , the two sides will discuss measures to expand and develop bilateral relations, which have been elevated to a comprehensive strategic partnership.

Yonhap also quoted a statement from the South Korean President's Office saying that President Yoon's visit would focus on strengthening economic cooperation with South Korea's third-largest trading partner, with several different economic events planned, including a bilateral partner fair, a luncheon with South Korean businesspeople in Vietnam , and a business forum.

A day before President Yoon's visit to Vietnam , the Korea JoongAng Daily published an English-language article titled "Yoon's visit highlights economic ties with Vietnam ." The article emphasized that South Korea and Vietnam elevated their bilateral relationship to a comprehensive strategic partnership last year, and that this relationship is likely to deepen further after the two sides reached an agreement last month to strengthen supply chain resilience.

"Economic relations between South Korea and Vietnam have made significant progress over the past three decades. We predict that bilateral trade volume will double to $150 billion by 2030," Korea JoongAng Daily quoted Kim Bong-man, head of the International Affairs Department at the Federation of Korean Industries (FKI), as saying.

Faculty of Literature

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"FDI has always been an important capital channel for the economy. In the context of a slowing global economy, Vietnam needs to take advantage of attracting high-quality capital through important meetings and exchanges like this. Investors with green growth projects, environmentally friendly projects, sustainable development projects, financial services projects, etc., should be considered in good faith," Mr. Thanh said, suggesting that in attracting investment, attention should be paid to projects that transfer technology, expertise, and skills to domestic businesses. Quality capital is important, but even more important are regulations on technology transfer, ensuring Vietnamese businesses have the opportunity to participate in global supply chains.

Associate Professor Nguyen Thuong Lang commented: "This trip can also be considered an important exploratory visit to Vietnam 's policies as it prepares to implement the global minimum tax rate of 15% in 2024. If the principle of non-retroactivity is applied, significant incentives can still be implemented. Vietnam must demonstrate to investors that attracting FDI is no longer just about tax exemptions and reductions; we have many other advantages that investors should consider. Furthermore, observations show that the delegation includes many investors in high-quality service sectors. Perhaps businesses from South Korea are looking to shift and expand their financial and healthcare service business networks in Southeast Asia, possibly using Vietnam as a 'hub'? If Vietnam implements appropriate and effective policies to attract investment, FDI from South Korea in the high-end service sector will increase significantly in the near future."

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