Vietnam - Korea economic cooperation: Strong in both quality and quantity

Strategic stronghold

It is no exaggeration to say that Vietnam is a "fertile land" for Korean investors. Up to now, most of the country's largest enterprises have been present in Vietnam with investment capital of up to hundreds of billions of USD. Korea is currently the largest investor in Vietnam, with a total registered capital of 94 billion USD and 10,203 projects, accounting for 23.5% of the total number of projects and 18.1% of the total FDI capital in Vietnam. This country is also the third largest investor in terms of trade value in 2024, with bilateral turnover reaching 81.5 billion USD, an increase of 7.3% over the previous year.

Samsung (Korea) is the largest foreign investor in Vietnam.

Photo: Nhat Bac

FDI from Korea to Vietnam over the years

Graphics: Tuan Anh

Most recently, on July 31, the Khanh Hoa Province Economic Zone and Industrial Zone Management Board granted the 11th adjusted investment registration certificate to HD Hyundai Vietnam Shipbuilding Co., Ltd. with the total investment capital increased to VND8,126 billion (USD351.8 million). In particular, the new activities are investing in wharves with a total investment capital of about VND1,547 billion.

In addition, Samsung Group not only leads Korean FDI in Vietnam but is also the largest foreign investor in Vietnam, with a total registered capital of 23.2 billion USD. In 2024, Samsung Vietnam's revenue and export value will be 62.5 billion and 54.4 billion USD, respectively. Entering Vietnam in 2008, initially just a mobile phone factory in Bac Ninh, after 17 years, Samsung has 6 factories, a research and development center (R&D) and a sales entity in Vietnam. Not simply a production base, the group chose Vietnam as a strategic base, taking on the dual tasks of production and research and development globally. Earlier this year, Samsung Display officially received an investment registration certificate to expand its capital increase for its factory in Yen Phong Industrial Park (Bac Ninh) with an investment of 1.8 billion USD. With this huge investment, Samsung Display VN aims to become Samsung's largest screen manufacturing facility in the world . At the meeting with Prime Minister Pham Minh Chinh in 2024, Mr. Park Hark Kyu, Samsung's General Director in charge of finance, said that the group plans to invest an additional 1 billion USD each year in Vietnam in the coming time, continue to increase the number of Vietnamese enterprises participating in the supply chain and promote cooperation in human resource training...

LG is also one of the largest foreign investors in Vietnam with a total capital of 8.24 billion USD, concentrated in Hai Phong . Including 7 projects with an investment capital of 7.24 billion USD (LG Electronics, LG Display, LG Innotek, LG CNS, LG Chemical (2 projects), LG International) and 50 satellite enterprises with a total investment capital of nearly 1 billion USD. At the end of last year, LG Display also received an investment registration certificate for a 1 billion USD project in Hai Phong, increasing the total investment capital from 4.65 billion USD to 5.65 billion USD. This is one of the largest investment projects of LG Group in Vietnam, specializing in the production of high-tech OLED screens with a scale of 13-14 million products/month.

Hyosung is the third largest FDI partner of Korea in Vietnam. Since 2007, this group has invested more than 4 billion USD in key areas such as raw materials industry, textile, chemistry, and electrical systems. Notably, almost all of the group's factories in Korea have been transferred to Vietnam. Mr. Cho Hyun-joon, Chairman of Hyosung Group, affirmed that Vietnam's investment environment is very trustworthy and Hyosung is fulfilling its commitment to place its future here for the next 100 years, positioning itself not only as a Korean company but also as a Vietnamese company. The group plans to invest an additional 4 billion USD, creating about 10,000 new jobs, doubling its total investment capital in Vietnam.

Capital flows right towards Vietnam's strategic goals

The Ministry of Industry and Trade said it is promoting the attraction of Korean enterprises to invest in Vietnam in potential energy fields such as electricity, LNG port warehouses, nuclear power - small modular reactors, joint ventures to invest in automobile assembly and production, production of energy batteries for cars, electric motorbikes... And when Vietnam "called", Korean enterprises "answered".

While the big names Samsung, LG... are leading in high technology and semiconductors, in the field of renewable energy, recently, Posco International Company (under Posco Group, one of the world's largest steel manufacturers from Korea) has sent a document to the Ministry of Industry and Trade proposing to be directly appointed as the investor to develop the integrated LNG Quynh Lap and LNG Nghi Son power projects. Previously, in April, SK - the third largest multi-industry group in Korea, also proposed to build integrated industrial development centers and wished to cooperate in developing LNG power plants in Vietnam in Thanh Hoa, Ninh Thuan (now Khanh Hoa), Ca Mau...

Economist Vo Tri Thanh - Director of the Institute for Brand Strategy and Competitiveness - assessed that along with Singapore and Japan, Korea is one of the three strongest pillars, increasingly becoming an important investment partner of Vietnam. Not only because of the large amount of capital, but also because investment projects from this country are aiming at the strategic goal of attracting FDI of Vietnam, with investment projects in most provinces and cities. In particular, the quality of investment capital from Korea is also highly appreciated, based on scientific and technological advances transferred and applied by Korea.

"Vietnam is still an attractive investment destination for foreign investors in general and Korea in particular. Korean FDI capital flows are forecast to increase, continuing to make positive contributions to Vietnam's GDP growth," Mr. Thanh said, analyzing the large-scale projects of Samsung, LG, Posco, Hyundai, Lotte... in Vietnam for a long time, clearly seeing their important contributions to Vietnam's socio-economic development. Especially the general contribution to the development of the electronics industry, building large research and development centers in the world. "Along with the "core" projects of Samsung, LG..., hundreds of Korean investors come to Vietnam to invest and do business, creating more momentum for the Korean FDI wave. Thanks to that, the number of enterprises participating in the global supply chain through these technology "eagles" is increasing in quantity, quality, and competitiveness...", expert Vo Tri Thanh emphasized.

Import and export towards 150 billion USD

South Korea is one of Vietnam's earliest and largest trade partners. The two countries established official diplomatic relations in 1992, signed the Vietnam - Korea Free Trade Agreement (VKFTA) in 2015 and upgraded the relationship to Comprehensive Strategic Partnership in 2022. Since then, bilateral trade relations have developed remarkably with trade turnover increasing more than 150 times. Specifically, in addition to the first position in FDI, South Korea is currently the second largest importer and third largest exporter of Vietnam. In the opposite direction, Vietnam is currently Korea's largest economic partner in ASEAN, accounting for 30% of investment capital and 50% of total trade turnover. In particular, the structure of goods is different, so trade between Vietnam and South Korea is highly complementary.

With the above advantages, according to the Ministry of Industry and Trade, the two countries are aiming to increase bilateral trade turnover to 100 billion USD this year and 150 billion USD by 2030 in a balanced and sustainable direction. Professor Nguyen Mai, Chairman of the Association of Foreign Investment Enterprises, is confident that this goal is completely achievable. Because the VKFTA Agreement, which has been in effect for 10 years, has been making an important contribution to promoting the multifaceted cooperation between Vietnam and Korea to develop more sustainably and prosperously. In addition to the bilateral FTA, Vietnamese enterprises also have more options when trading and importing and exporting with Korea, thanks to the Regional Comprehensive Economic Partnership Agreement (RCEP) which has come into effect since 2022, and the ASEAN - Korea Free Trade Agreement (AKFTA).

"To facilitate Korean investors, at the end of last year, Vietnam and Korea also signed an agreement to recognize priority enterprises. Not only exporting, Vietnam also imports goods from Korea with high turnover. Vietnam's main export items to Korea such as textiles, means of transport and machinery produced by Vietnamese enterprises are strengths, always achieving high growth rates. These are also the strengths of small and medium enterprises in Vietnam. It can be said that bilateral trade between Vietnam and Korea is complementary and develops together," Professor Nguyen Mai emphasized.