11:06 | 06/06/2015 Cooperation
(VEN) - The Korea-Vietnam Free Trade Agreement (KVFTA) offers great opportunities for Vietnam in attracting investment capital in the electronics industry.
RoK companies have continuously poured investment capital into Vietnam
Opportunities for export and import of electronic components
The tariff commitments in the KVFTA show that electronic components are one of several material groups that cut import duties. According to the General Department of Vietnam Customs, Vietnamese businesses imported most of electronic components from the Republic of Korea (RoK) in 2014, reaching US$5.04 billion in import turnover.
A reduction in import duties of electronic components would also create pressure on domestic manufacturers. However, this is a valued opportunity for domestic manufacturers to enhance their competitiveness in order to participate in the global value chain.
Vietnamese businesses are able to import electronic components at cheaper prices, helping the electronic manufacturing and assembly industry develop stronger and create more jobs, opening up the opportunity for Vietnamese electronic ware and mobile phone exports, increase export earnings and reduce the existing trade deficit.
Prospects for attracting FDI from the RoK
The KVFTA with commitments on services and investment is helping the Vietnamese investment environment become transparent, contributing to attracting more RoK investors in Vietnam, especially in the electronics industry.
Foreign direct investment (FDI) from RoK businesses in Vietnam has constantly increased in recent years, especially since the launch of the KVFTA negotiations in August 2012.
The RoK remained Vietnam’s third largest trade partner with two-way trade turnover of US$26 billion, while ranking first among the countries and territories investing in Vietnam with its total investment capital of US$7.32 billion in 2014.
FDI capital from the RoK pouring into Vietnam reached US$1.47 billion in 2011 and US$1.17 billion in 2012. However, the figure strongly increased to US$4.3 billion in 2013 and US$7.32 billion in 2014.
According to the Ministry of Planning and Investment’s statistics, RoK businesses invested nearly US$1 billion in Vietnam in the first four months of this year, accounting for around 25 percent of total FDI capital in the country and putting the RoK in the first place among the 50 countries and territories investing in Vietnam so far this year.
LG Electronics Inc. and Samsung Group are the RoK’s two largest investors in Vietnam. LG Electronics Inc. poured additional US$1.5 billion into Hai Phong’s Trang Due Industrial Park in October 2013 after their US$300-million investment in the two factories in Hung Yen and Hai Phong. Samsung Group’s investment capital in Vietnam has increased to more than US$10 billion and this figure will continuously increase in the coming time./.
By Nguyen Huong & Nguyen Phuong