16:21 | 31/08/2015 Economy
(VEN) - The Republic of Korea (RoK) currently leads the 103 countries and territories investing in Vietnam with investment from the country expected to increase sharply in the coming time.
LG is a one of the South Korean Fortune 500 firms operating in Vietnam
The number-one investor
The RoK had invested in 4,555 projects in Vietnam with total registered capital of more than US$40 billion by the end of this July, accounting for 24 percent of all projects and more than 15 percent of total foreign direct investment (FDI) registered capital. Korean FDI soared in the first six months of this year with 356 newly registered projects and more than 100 ongoing projects which have increased their capital. The RoK’s total new and supplementary capital reached almost US$1.9 billion during this period accounting for 34 percent of total projects and 21.5 percent of total FDI in Vietnam in the first seven months of this year.
Korean investors in Vietnam include Fortune 500 giants such as Samsung, LG, GS, Posco, Huyndai, Kepco and SK.
According to the Ministry of Planning and Investment, most Korean investment went to Hanoi, Bac Ninh, Thai Nguyen, Vung Tau, Ho Chi Minh City, Vinh Phuc, Long An, Dong Nai and Binh Duong and were focused in processing, manufacturing and real estate. Korean investors have not only obeyed Vietnamese law but also protected the environment, created about 700,000 jobs and contributed more than 25 percent of total export value, becoming a major part of the Vietnamese economy.
Vietnam still attracts RoK investors
At a Vietnam-RoK investment workshop held in mid-July, the RoK’s ASEAN Center General Secretary Kim Young Sun said that Vietnamese young people do not lag behind any other country in terms of vocational skills. Two-way trade has climbed over the last 20 years of diplomatic relations from US$500 million in the first year to more than US$30 billion in 2014 and is expected to reach US$70 billion by 2020.
According to the Ministry of Planning and Investment’s Foreign Investment Department Director Do Nhat Hoang, Vietnam has attracted Korean investors due to the stable political system, the young population, the strategic partnership, similar cultures, the strategic position, economic integration and open-door policies, economic growth and strong work force.
According to the Japan External Trade Organization (JETRO), investment costs in Vietnam are much cheaper than many other countries in the region. Specifically, the average land rental stands at only US$0.14 per sq.m in Vietnam compared with US$0.23 in Myanmar, US$4.91 in China and US$6.34 in Thailand. Office lease rate averages US$33 per sq.m in Vietnam compared with US$45 in Thailand and US$164 in China. Similarly, the average wage is US$123 per person per month in Vietnam compared with US$366 in Thailand and US$552 in China. Taking these facts into account, experts believed that the Vietnamese investment environment is still attractive to RoK investors.
According to RoK Ambassador to Vietnam Jun Dae Joo, a group of more than 20, mainly electronics-based RoK businesses, recently visited Vietnam to learn about the investment environment. Jun Dae Joo expected that RoK direct investment in Vietnam would continue to increase rapidly in the near future.
According to the Ministry of Planning and Investment, the Vietnamese government has always supported RoK investors in Vietnam, particularly those in the areas of electronics, support industries and high technology.