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|Rather than crawl back on strategies, South Korean groups are pushing forward aggressively in Vietnam, photo Duc Thanh|
During February 9-11, Vietnamese Minister of Foreign Affairs Bui Thanh Son paid an official visit to South Korea, marking the first important step for a series of events and high-level exchange visits that will be held this year when both nations will celebrate their 30th anniversary of diplomatic relations, and especially when they will officially elevate their existing strategic partnership to a comprehensive strategic partnership.
While meeting with Minister Son, President Moon Jae-in affirmed that South Korea considers Vietnam its key partner in the implementation of the country’s New Southern Policy. “He wishes that both nations will soon upgrade their relations to a comprehensive strategic partnership, and proposes that Vietnam continues creating favourable conditions for South Korean businesses to operate in Vietnam, especially investment into infrastructure, finance, and large-scale projects,” Vietnam’s Ministry of Foreign Affairs (MoFA) noted on its website.
In fact, 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 this new comprehensive strategic partnership set to be established in 2022. The move would mean more effective mechanisms will be created for Vietnam and South Korea to beef up their ties, with a major focus laid on trade and investment cooperation.
“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,” the MoFA said.
Meanwhile, South Korean Minister of Foreign Affairs Chung Eui-yong also told his Vietnamese counterpart, Minister Son, that the new cooperation framework should be focused on “further increasing the bilateral cooperation in the sectors of politics-diplomacy, defence-security, economy-trade, healthcare-science and technology, culture, and people-to-people exchanges.”
Vietnam wants to see South Korean businesses expand investments in its territory in many sectors, especially in high technology, renewable energy, digital transformation, and future industrial sectors. They are also encouraged to invest in the Southeast Asian market in technology transfer, constructing research and development centres.
According to the Vietnamese Ministry of Planning and Investment, total accumulative registered investment capital into Vietnam from South Korea as of January 20 reached $77.32 billion, making this Northeast Asian economy the second largest foreign investor of the Southeast Asian economy, followed by Singapore at $65.24 billion and Japan at $63.96 billion.
In the first 20 days of 2022, South Korea’s total registered investment capital in Vietnam sat at $481.2 million, making it the second-largest foreign investor in Vietnam, after Singapore ($665.75 million).
For example, last month JNTC Vina, which manufactures electronic spare parts, was granted an investment certificate in the northern province of Phu Tho to increase its registered capital by another $163 million from the initial $125 million, in a plan to expand production. The company has been operating a 6-hectare factory at Thuy Van Industrial Park since 2017. Last year, it expanded its factory by nearly 50,000 square metres to produce tempered glass for automobiles, watches, and cameras.
According to the Korea Chamber of Business in Vietnam (KorCham), if the Vietnam-South Korea comprehensive strategic partnership is materialised, both nations’ investment and trade ties will be further expanded as more favourable policies will be offered to firms from both sides to invest in their respective markets.
“South Korean businesses see Vietnam as a very good investment destination in Asia, and more billions of US dollars are set to come to Vietnam in the coming time in various sectors. I believe that South Korea will continue maintaining its position as a top investor in Vietnam,” said KorCham vice chairman Hong Sun.
Two months ago, leaders of the northern provinces of Thai Nguyen, Ha Nam, Bac Ninh, Thai Binh, and Hai Duong granted 15 investment certificates and cooperation agreements to South Korean enterprises, worth billions of US dollars.
Daewoo was licensed to implement new projects worth $2 billion in Vietnam, while Amkor Technology, Inc. was licensed by Bac Ninh to deploy a $1.6 billion semiconductor manufacturing project.
“The Amkor project is very big, with the application of very high technology,” Sun told VIR. “It is signalling South Korea’s investment into Vietnam in the semiconductor sector, whose products are now in serious shortage worldwide. Many European companies are thirsty for semiconductor products.”
“Thus, when this semiconductor project is carried out, Vietnam will be better known for this product,” Sun added.
Many South Korean businesses such as Amore Pacific, Kyobo Life Insurance, Hyosung, Dongwon, and GS Engineering & Construction have also revealed their plans to continue upping investment in Vietnam. Suh Kyung-bae, chairman and CEO of Amore, said that this group plans to establish a factory in Southeast Asia, in which it gives priority to selecting Vietnam, or may cooperate with Vietnamese businesses in this sector.
Meanwhile, general director of Kyobo Life Insurance Pyun Jung-bum said that it is paying special heed to the Vietnamese market. Jung-bum also underscored that the firm wishes to explore investment opportunities in the healthcare business and startups in Vietnam.
And Samsung is also investing heavily in Vietnam in many projects. Last week, Samsung Electro-Mechanics in Thai Nguyen province was licensed to increase its registered capital by another $920 million from the initial $1.35 billion, in a plan to produce camera modules, actuators, touch sensor modules, and linear motors, among others. A few weeks ago, Samsung Vietnam publicised its 2021 business results, at $74.2 billion in revenue, up 14 per cent on-year. The group’s export turnover hit $65.5 billion, an on-year rise of 16 per cent.
“We have not changed our business strategy in Vietnam. Besides disbursing all approved investment capital, we have annually maintained the added investment of hundreds of millions of US dollars to stabilise the operations of our factories, and improve productivity and product quality,” said Samsung Vietnam general director Choi Joo Ho.
Accumulatively, as of last week, the group’s total registered investment capital reached about $18.92 billion, up from the approved sum of $17.7 billion in 2020.
In August last year, LG Display Vietnam increased capital by an additional $1.4 billion in the northern port city of Haiphong, raising its total investment in Vietnam to $4.65 billion.
Vietnam and South Korea have agreed on a plan to improve the quality of economic, trade, and investment cooperation, with efforts via more favourable policies to be created in order to raise the bilateral trade turnover to $100 billion next year and $150 billion by 2030.
To this end, both countries have agreed on further opening doors for goods and services from both sides, while taking advantage of the Regional Comprehensive Economic Partnership, in which they are signatories.
According to South Korea’s Ministry of Trade, Industry and Energy, the combined amount of this nation’s exports to participants of the deal stood at $254.3 billion in 2020, accounting for about half of South Korea’s total outbound shipments.
Statistics from the General Department of Vietnam Customs (GDVC) demonstrate that total trade between Vietnam and South Korea hit $66.01 billion in 2020 – including $46.9 billion worth of South Korean exports and $78 billion in 2021 - including $56.1 billion worth of exports.
Last month, Vietnam witnessed a trade deficit of $3.8 billion from South Korea, up 28.9 per cent on-year. However, the GDVC said the deficit was not a concern as almost all products imported from South Korea are materials used for domestic production in Vietnam and not luxury items.