Koreans drive industrialisation

LG Electronics, Samsung, and other corporations are driving South Korea’s growing investment in Vietnam. Photo: Le Toan

South Korean giants including Samsung Electronics, Doosan Heavy Industries, Kumho Asiana, Lotte and Posco have all heavily invested into Vietnam and are planning to increase their investments in the country in the near future.

Samsung Electronics, the world’s largest electronics firm, has already committed $8 billion to Vietnam for its facilities in Bac Ninh, Thai Nguyen and Ho Chi Minh City. Other subsidiaries of Samsung Group are researching investment opportunities in the country in the shipbuilding, property and power sectors.

Since Samsung Electronics built its first mobile phone factory in Bac Ninh in 2007, the company has helped Vietnam become a hub for global electronics exports. Last year Samsung Electronics’ total revenue from its Vietnam operations totalled $22 billion, a fifth of the nation’s total export value.

Export revenue from electronics products is expected to further increase next year, when Samsung puts its manufacturing complex in Thai Nguyen province into full operation and LG Electronics starts production on its $1.5 billion complex in Haiphong.

The focus of Korean transnational companies on Vietnam reflects that the country has moved from a destination for light industry (footwear, garments and textiles) to one for heavy industry.

Vietnam’s Foreign Investment Agency (FIA) reported total investment commitments from South Korea this year to September 20 came to $3.55 billion, accounting for a third of total foreign direct investment commitments during the same period. South Korea is the biggest investor into Vietnam this year.

“In the past we could only attract Korean investment into light industries, but there is a growing trend towards more advanced industries,” said Do Nhat Hoang, director of the FIA.

“South Korea is one of Vietnam’s most important direct investors and I think this will continue and more investment will be seen in hi-tech industries,” he added.

Hong Sun, general secretary of the Korean Chamber of Commerce and Industry, said Vietnam was the second most important investment destination for South Korean investors, after China. Therefore, he said many major firms were likely to increase their investments in the country.

Posco Group, for example, has said it considers Vietnam a key market in the Southeast Asia region. The group is going to inaugurate a steel factory in Ba Ria-Vung Tau province.

Kumho Asiana, which built a $100 million tyre factory in southern Binh Duong province in 2008, is planning to expand its investment in Vietnam to $300 million. The expansion would increase total capacity to 5.6 million units. Kumho Asiana Group chairman Sam-Koo Park also announced that the group planned to further expand the plant to reach an output of 13 million units.

Another Korean firm, Doosan, is preparing to expand the second phase of its production base in Vietnam, focused on manufacturing nuclear power equipment, a move aimed at better positioning the company as a potential contractor for domestic nuclear power plants.

Lotte Consortium – a joint venture between Korea’s Lotte and Japanese investors – was recently granted in-principle approval to develop the company’s proposed Smart Complex. The $2 billion facility is planned for the 2A area in the Thu Thiem New Urban Area in Ho Chi Minh City’s District 2. Lotte said it envisioned the complex as a landmark of the city and greater Southeast Asia.

Early this month, Lotte opened the Lotte Centre Hanoi - a major apartment, office, shopping and entertainment tower.