Korea: Leading Investor in Vietnam

according to the Foreign Investment Agency (Ministry of Planning and Investment), 2007 is the second year in a row that Korea has maintained its top position in the list of 82 foreign investors operating in Vietnam with 403 projects, and registered capital of approximately US$4.2 billion. Korean investors have considered an attractive market and they are proving their brandnames in the market with long-term investment and business commitments in .

As such, the new wave of investment as forecasted by many has become true. That wave is forecasted with the base on three facts, including: first, some sectors which are no longer suitable are moved overseas; second, the investment market is diversified, i.e. part of investments into is transferred to other countries in the region, especially ; third, investment environment is enjoying more and more improvement. Furthermore, – ASEAN free trade agreement which came into effect in June 2007 helps to make ‘a very important market’ of Korean investors. This helps be provided with the presence of two out of seven enterprise support centres under the management of KOTRA for Korean enterprises operating overseas. And what is important is that lots of Korean investors have been enjoying success in . According to a survey conducted by Korea in late 2005, above 90 percent of Korean investors in Vietnam showed their pleasure with the investment environment and more than 60 percent enjoyed success in Vietnam (while that rate in China just stays at 20 percent. And most recently, the result of an opinion conducted by Korea Commerce Association on 580 domestic enterprises shows that in the future, will be an attractive investment destination to , only trailing . As such, beside new investment capital, this year, enterprises make an additional investment of US$467 million to projects already in progress in . For the moment being, many Korean giants such as Posco, Sam Sung, Lotte and Kumho Asiana are present in .

The investment structure of in is witnessing great changes with significant increase in the number of projects and capital amount poured into real estates and key industrial sectors of like energy, chemical, petro-chemistry and steel production instead of concentrated investments in light industrial sectors like garment and textile and footwear only. is also recognised as among investors with a breakthrough in capital size for each project. A series of projects with large capital are in progress, including projects of constructing the group of Hanoi Plaza five – star hotel and twin towers and the luxurious office buildings with investment capital totalling US$500 million by Charmvit corporation and project of constructing Landmark Tower buildings for office and hotel purposes with capital totalling US$1 billion by Keangnam corporation.

Beside convenience brought about by investment policies, two issues making many Korean investors concerned include limited infrastructure and high land rental fee. In addition, the lack of information and difference in languages are also big obstacles to Korean investors when making investments into . However, thanks to the efforts of the government made in upgrading and improving the infrastructure system including electricity system, water system, transportation works and seaport system with an aim to creating favourable conditions for investment activities, human resource training and the implementation of strong tax reduction  under WTO commitments, etc., Vietnam is expressing its attractiveness to Korean investors. also continues on its path to open the service sector including some important sectors like telecommunication trading, transportation, banking, insurance and securities to create further favourable conditions for foreign investors. All these endeavours are helping pave the way for to be an appealing destination for Korean investors.

 Trung Kien