Investment from South Korea awaits greater thrust

February 08, 2024 | 23:05
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South Korean businesses and investors are waiting for more legal improvements to expand their activities in Vietnam in 2024 following signals of recovery in late 2023.

We appreciate the efforts of the Vietnamese government in its administrative reform during last year to remove challenges facing South Korean businesses and foreign-invested enterprises in general. This is a good foundation for any expansion plans.

Investment from South Korea awaits greater thrust
Hong Sun, chairman, Korea Chamber of Business in Vietnam

One of the highlights is the issuance of rules on work permit management for foreign labourers in Vietnam. Over the past three years, we have paid attention and sent suggestions about the issue. And we were so happy when the Vietnamese government, specifically the Ministry of Labour, Invalids, and Social Affairs, made positive changes.

We expect further refinements in other laws and decrees in the months to come. Specifically, we hope the Vietnamese government will have solutions to speed up licensing issues for energy projects. We have been waiting for Vietnam’s National Power Development Plan VIII for a long time, and we expect to have specific instructions soon to raise confidence among foreign investors in the field.

In addition, we have noticed that the visa and work permit regulations have had positive changes: Vietnam now waives visas for 45 days compared to 15 days as it did in the past, which is impressive to us. We expect to have more open policies, contributing to attracting more foreign investment and developing the tourism industry.

We propose to expand the subjects to visa exemption for foreigners and apply temporary residence cards to them. Currently, foreigners holding the position of general director can only stay in Vietnam for two years. After that, they also have to re-register with new documents, which is very time-consuming.

The official visit to Vietnam in 2023 by the South Korean President was an impetus for South Korean investors to feel secure in continuing their investment expansion in the country.

Vietnam was the first Southeast Asian country that President Yoon Suk Yeol visited after taking office. This shows the importance of Vietnam in South Korea’s foreign affairs policy, demonstrating South Korea’s respect for Vietnam, and a clear testament to the good relationship between the two countries.

For Vietnam, South Korea is the third-largest trading partner after China and the United States. Vietnam is also South Korea’s third-largest trading partner. In South Korea’s economic development strategy in the Southeast Asian region, Vietnam is one of the most important markets. It is also a key country in our cooperation policy in Asia.

Vietnam and South Korea also have strong investment ties. In 2023, about $4.4 billion worth of South Korean investment poured into Vietnam, making it the fifth-biggest foreign investor in the Southeast Asian region. We forecast the situation will improve this year.

There are currently nearly 10,000 South Korean businesses investing in Vietnam, with many large corporations such as Samsung, LG, Lotte, and CJ, among others.

Investment in high-tech, chips and semiconductors continues to be an important field in the South Korean investment structure in Vietnam. But in the near future, there will be more diversity in South Korean investments in Vietnam, not only in the production and manufacturing but also in billion-dollar energy projects. During recent high-level talks, the two sides mentioned many new areas of cooperation, especially cooperation in energy, considering it the infrastructure and foundation to engage South Korean investment inflows into Vietnam.

Many large energy projects worth billions of US dollars are waiting for licences to invest, while many secondary investors are also waiting for opportunities. Along with these, the retail service industry is still the traditional industry that South Korean businesses focus on in Vietnam.

Last year, global uncertainties and complicated developments strongly affected South Korean firms. Inventories from countries such as in the US and Europe have affected big South Korean corporations, forcing them to reduce production in Vietnam. Many supporting businesses for Samsung and LG were also strongly affected.

In the past year, all businesses have encountered difficulties. We have tried our best to overcome these; and from the fourth quarter of 2023 we have seen positive signs and an increase in the export turnover of major global firms. Our businesses still see Vietnam as an attractive investment market globally, and expect it to grow stronger in 2024.

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By Hong Sun

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