South Korean investors eyeing new growth sectors

With trade tensions having had a profound impact on investment flows, what are your thoughts about Vietnam’s investment environment attracting South Korean enterprises and the Vietnamese Government’s level of support?

It is true that FDI in Vietnam is down slightly due to the impact of the current global economic recession. However, considering Vietnam’s economic conditions, many South Korean investors will continue to invest in the country. Based on its active investment attraction and sustainable financial policies, many countries around the world, including South Korea, are very interested in the country. Through the “Meet Korea 2023” event, many South Korean enterprises are now looking for investment opportunities in Vietnam.

In addition to the manufacturing and processing sector, South Korean enterprises are also interested in sectors that create new growth, such as the environmentally-friendly sector, information technology (IT), and digital transformation, etc. Therefore, South Korea hopes that the Vietnamese Government will offer more support policies in these sectors.

What measures do South Korean enterprises need to strengthen supply chains in the manufacturing and processing sector?

South Korean enterprises have built supply chains focusing on the manufacturing and processing sector to manufacture products in Vietnam and then export them abroad. However, it is necessary to upgrade the existing economic cooperation between the two countries to deploy the production of high value-added and high-tech products. In particular, with Vietnam’s mineral resources for the high-tech industry, the two could jointly consider building a cooperative model to produce high-tech products in Vietnam, and then supply those products to the world to achieve common development in both countries. 

What challenges are there for South Korean enterprises when investing in Vietnam?

South Korean enterprises are interested in investing and expanding their investment in Vietnam due to the positive investment attraction policies from the Vietnamese Government and Vietnam’s growth prospects. However, they still face a number of difficulties in business activities in Vietnam, such as increasing uncertainty due to rigid regulations and different interpretations of laws in localities. They also face challenges due to approval and licensing delays, which hinder production and increase the cost burden.

An example of the difficulties is the testing procedures for fireproof paint under the revised Law on Fire Prevention and Fighting. Though South Korean enterprises are very supportive of the importance of ensuring safety through strengthening relevant regulations and do their best to comply with Vietnamese laws, it took a long time for the enterprises involved to receive certificates for fire retardant paint, making it impossible for some to operate a new factory even though it had been built. This will directly lead to investment losses for South Korean enterprises and their investment activities in the future.

Another example is that South Korean enterprises often have difficulties obtaining work permits. When South Korean enterprises in Vietnam need to recruit foreign workers, this may not be approved or there may be delays because South Korean enterprises are required to provide additional documents many times over.

2023 marks the 30th anniversary of the establishment of diplomatic relations between Vietnam and South Korea. What do you forecast for trade and investment between the two countries in the future?

Despite the economic cooperation between the two countries facing many difficulties due to the impact of the current global economic downturn, the “Meet Korea 2023” event still attracted the participation of more than 117 South Korean enterprises and many provincial leaders from around Vietnam. This number was higher than any similar event held previously. This shows that Vietnam and South Korea’s economic cooperation is still quite stable and strong and has strong prospects for recovery thanks to the positive economic stimulus policies from the Vietnamese Government.

What sectors are in need of development priorities and why?

The strategic economic cooperation between the two countries in new growth sectors such as the digital economy and the green economy has gone beyond the framework of investment activities that focus on the manufacturing sector and is becoming increasingly important. We are also making great efforts to support the investment activities of South Korean enterprises in sectors such as IT and communications that are necessary for digital transformation, as well as green growth and environmentally-friendly sectors.