Hong Sun, vice chairman of the Korea Chamber of Business in Vietnam, told VIR that a number of major South Korean investors are planning to pour billions of US dollars into Vietnam in anticipation of South Korea’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and better conditions to be created by an upcoming comprehensive strategic partnership upgraded from both nations’ existing strategic partnership.
“The investors are working with the government, relevant ministries, and localities for these projects, which will operate in the sectors of manufacturing, high technology, and electronics,” Sun said. “Representing over 9,300 South Korean companies in Vietnam, we are eagerly awaiting South Korea’s accession to the CPTPP and both nations’ new cooperation framework.”
South Korea approved a plan on April 15 to join the mega free trade agreement involving 11 Asia-Pacific nations, as the country seeks to diversify its export portfolio and expand investments overseas amid heightened economic uncertainty.
South Korea’s government will submit an official application after completing domestic procedures, including a report to the National Assembly.
“The government has carefully reviewed joining the CPTPP over the past eight years, and the entry decision was made after considering its economic and strategic values,” said South Korea’s Minister of Trade Yeo Han-koo, as cited by Yonhap.
Vietnam will, together with other CPTPP members, work with South Korea on its plan to join the deal. Currently, the trade and investment ties between both nations are largely driven by the Korea-Vietnam Free Trade Agreement, the ASEAN-Korea equivalent, and the Regional Comprehensive Economic Partnership. Thus, if South Korea becomes a member of the CPTPP, exporters from both nations have an additional option on tariff reductions to apply for.
“The agreement will offer a very big opportunity to South Korean companies to invest in and expand trade with Vietnam, because it boasts great potential and big purchasing power, as well as attractive investment policies,” Sun said, adding the most interesting sectors in Vietnam include consumer goods, manufacturing, electronics, garments and textiles, finance, mergers and acquisitions, and agriculture.
Since early this year, South Korea’s LG Display Vietnam Haiphong Co., Ltd. has been boosting its recruitment of employees for its $1.5 billion plant in the northern city of Haiphong, producing OLED products. The company is in need of many employees who will work as lawyers, general assistants, and engineers in production, safety, and IT, as well as more besides.
Meanwhile, LG Electronics Vietnam Haiphong has been doing the same, with many engineers and staff in need for its $1.5 billion facility to produce home appliances, smartphones, and car infotainment products.
Samsung has also followed suit, with new employees to work for its plants in Ho Chi Minh City, Hanoi, and the northern provinces of Bac Ninh and Thai Nguyen, with total investment capital of over $17.7 billion, employing over 160,000 local workers.
Both Samsung and LG are taking the lead in Vietnam’s export of electronics. Samsung Vietnam saw a rise in sales and exports in 2021 compared to 2020, with revenues increasing by 14 per cent from 2020 to $74.2 billion in 2021, while export turnover increased by 16 per cent on-year to reach $65.5 billion in 2021.
Choi Joo Ho, CEO of Samsung Vietnam, said in a meeting with the leadership of Danang People’s Committee on April 1 that the company expects to receive favourable conditions for implementing research and investment promotion activities in the city.
In February, Thai Nguyen handed over a licence to Samsung Electro-Mechanics Vietnam to add $920 million to its project in the Yen Binh Industrial Park in Pho Yen town, raising its total investment in the park to about $2.27 billion. The company’s project in the park was first licensed in 2013 with total capital of $1.35 billion, largely manufacturing and assembling high-density interconnect printed circuit boards, components, and spare parts.
During a visit to South Korea last December by Vietnamese National Assembly Chairman Vuong Dinh Hue, he and his counterpart Park Byeong-seug agreed on the new comprehensive strategic partnership set to be established in 2022.
“Both sides agreed on key joint activities for 2022 including the elevation of the two countries’ relations to a comprehensive strategic partnership, the thorough organisation of high-level visits and contacts of both nations’ senior leaders, and the effective implementation of existing cooperation mechanisms in order to practically benefit the two nations,” Vietnam’s Ministry of Foreign Affairs said.
According to Vietnam’s Ministry of Planning and Investment, the total accumulative registered investment capital into Vietnam from South Korea as of March 20 reached $78.57 billion, making the latter the largest foreign investor of the former, followed by Singapore at $67.56 billion and Japan at $64.4 billion.