Korean expectations for deals in Vietnamese market

Therefore, it would be hard to forecast very active investments and M&As from South Korea to Vietnam as well as to other countries until the first half of 2023.

Shon Young Il - Chairman, Korean Chamber of Commerce and Industry Ho Chi Minh City

However, if things are looking up in the global market, it is expected that subdued demands for outbound investments from South Korea could burst at once, like investors holding their breath during the long dark period of the pandemic, and resume their M&A deals.

Therefore, each business sector would be better off using any slowdown period wisely for preparing and making the most out of such business opportunities in the near future.

In this regard, the Vietnam-Korea Free Trade Agreement (VKFTA) could be a facilitator that gives momentum to promote M&A transactions between the two countries once the sluggish stage has passed.

This bilateral treaty has taken a significant role in triggering more business transactions by breaking down the business barriers between South Korea and Vietnam so far.

In particular, the VKFTA includes a recognition of the importance of e-commerce and commitment to e-commerce activities between the two countries in Article 10. Such provision has not been introduced in any other Vietnamese trade agreements previously, and it provided a basis of promoting e-commerce with sub-provisions regarding the mutual effort to adopt or promote electronic signatures, paperless trade, and online consumer protection.

In recent years, e-commerce has been one of the pioneering sectors of the Vietnamese economy, with advanced technologies widely applied by increasing the efficiency and modernisation of domestic and foreign transactions. Because there is incredible room for growth in such an industry in Vietnam, further investments and M&A transactions could be expected in e-commerce and its related business sectors in Vietnam.

In addition, Article 13.2 of the VKFTA stipulates particular business sectors that South Korea and Vietnam should explore together and undertake cooperative activities considering mutual benefits and interests. These business sectors include automobiles, steel and metal, petrochemicals, electronics, machinery, garments and textiles, footwear, and logistics.

Among these businesses, it is expected that South Korean investors are more likely to keep their eyes on automobiles, petrochemicals, and aquaculture in particular.

Also, South Korea and Vietnam mutually agreed through the annex of the VKFTA to strengthen bilateral cooperation in recreational and cultural services. Such cooperation can facilitate cultural exchanges between the two countries, and development in entertainment service businesses which cover music, radio, live theatre, movies and television, publishing, and digital media.

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