South Korean companies invested in Vietnam long before the two countries established diplomatic relations. First projects had very small scales. South Korea made official direct investment in Vietnam in 1992. Since then, its direct investment into Vietnam has increased rapidly (a rise of (200 folds from US$100 million in 1992 to US$22.9 billion in 2010).
As of February 2012, South Korea had 2958 valid projects in Vietnam with total investment capital of US$23.943 billion. Processing and manufacturing sectors attracted 1,806 projects valued at US$11.367 billion, followed by real estate sector with 77 projects (US$6.763 billion). Hanoi took the lead in attracting South Korean investment capital with 604 projects and US$4.701 billion, followed by Ho Chi Minh City 807 projects and US$3.711 billion.
Project scale also expanded strongly. In the early stage, most South Korean projects in Vietnam were rated small and medium, mainly focusing on light industries like garment, textile and footwear. Now, they mainly focus on industrial projects like electronics, steel, urban construction, office, hotel and high-tech. There are mega-size projects worth billions of US dollars. For instance, Posco Group registered to invest US$1.26 billion to build a steel mill, or Kumho Asiana was licensed to inject US$2.5 billion to construct a cultural and commercial centre in Me Tri, Hanoi.
South Korea’s investment prospects in Vietnam are hugely potential because of strong bilateral relationship development. Another reason is Vietnam has become an attractive destination for foreign investors, including Koreans, for its low-paid labour, better investment environment, high economic growth rate and prime location (the centre of ASEAN). Moreover, Vietnam becomes an important market for South Korean investors after it Vietnam joined the World Trade Organisation (WTO) and signed the ASEAN - Korea Free Trade Area Agreement, effective in June 2007.
According to experts, South Korea’s investment capital in Vietnam may top US$30 billion in 2015. And, South Korean investors also find out tremendous potentials in Vietnam like "booming" economy, golden demographic structure, and politic stability. South Korea’s increasing ODA (official development assistance) capital for Vietnam is seen a driving force for new FDI (foreign direct capital) flows into Vietnam.
Anh Phuong
Vietnamese
