14:43 | 19/04/2016 Economy- Society
(VEN) - After three decades of renovation and international integration, Vietnam has provided good conditions for foreign direct investment (FDI) businesses, including those from the Republic of Korea (RoK). However the success of foreign-invested firms points to the need for Vietnamese businesses to show greater creativity to increase value and enhance competitiveness. Hyung Taek Jo, Chief Representative of the Korean Small and Medium Business Administration and Chief Executive Officer (CEO) of the Bizwell Co., Ltd, shared his opinions on the issue with Vietnam Economic News’ Lan Anh & Pham Ky.
The Korean Lotte Group continues to expand operations in Vietnam
How long have you been in Vietnam? What’s your perception of Vietnam’s investment environment?
I’ve been in Vietnam since 1995. I have good feelings about the business environment here. The Vietnamese government has strived to improve mechanisms through appropriate policies, and amended laws and regulations applied to foreign investors, creating favorable conditions and open mechanisms for foreign businesses to invest in Vietnam. Your country is integrating more deeply into the global economy and has participated in free trade agreement negotiations with other countries.
However, some problems have been revealed by the international integration process, including the untimely provision of information about new policies, inaccurate translation of Vietnamese legal documents into foreign languages, and complicated information processing systems. Therefore, Vietnam needs to pay greater attention to dealing with these problems so that it can provide investors with accurate information.
Could you share Bizwell’s activities in the recent period?
Playing the role of a bridge between the Korean Small and Medium Business Administration and Vietnam, Bizwell develops its operations in two directions: firstly in assisting Korean companies in accessing the Vietnamese market and doing business in Vietnam; and secondly assisting Korean businesses with no legal status in Vietnam in exporting to Vietnam.
The Korean Small and Medium Business Administration is eager to develop links with Vietnamese associations and organizations in order to provide information and consultancy for businesses from the two countries. Currently, we are maintaining our connection with the Vietnamese Small and Medium Enterprises Development Support Center 2 (SMEDEC 2) to expedite some business support projects.
We are also a member of the Overseas Korean Traders Association (OKTA) that has branches in 137 countries. Through this association, we can help Vietnamese businesses promote exports.
What are your views on the results of Korean investment in Vietnam?
Korean companies invest in Vietnam in a wide range of fields, focusing on manufacturing, processing, and construction. Those investing in manufacturing and processing have been more successful than construction and real estate investors. The success of Korean companies in Vietnam is attributed mostly to their export activities. In the past, Korean investment in Vietnam was concentrated mostly in textiles, garments, leather, footwear, and other labor-intensive sectors. Nowadays, Korean businesses have actively invested in high-tech areas such as manufacturing mobile phones, electronic products, and household utensils. Samsung Electronics is an example.
Regarding the reasons behind the success of Korean businesses in Vietnam, I think they have maintained good relations with local investment management, tax, and administrative bodies; paid great attention to human resource training; seriously abided by local regulations to create a good working environment; and actively carried out corporate social responsibility-related activities.
What do you think Vietnamese businesses need to do to make the most of the opportunities presented by the free trade agreement between the two countries?
Vietnam’s participation in free trade agreements has opened a lot of opportunities, but also challenges for local businesses. Vietnamese businesses need to be prepared to develop links. As the Trans-Pacific Partnership and the Republic of Korea-Vietnam Free Trade Agreement are interactive, local authorities need to explain these interactions and provide training to help local businesses prepare for international integration. These explanations need to be as easy to understand as possible. Vietnamese textile, garment, and support industry businesses can make the most of preferences from these FTAs to develop. The local agricultural sector will have to cope with numerous difficulties and challenges.
Therefore, agricultural businesses need to take the initiative in applying newer technologies in production to effectively utilize external resources. The successful export of Vietnamese agricultural products to developed countries in recent times offers good signs for the development of the local agricultural sector.
Moreover, global value chains are becoming indispensable trends, so Vietnamese and Korean businesses should concentrate on areas where the two countries have advantages such as textiles and garments, electronics, distribution and circulation of goods in order to bring into play the potential of the two sides.
Vietnamese businesses also need greater creativity to increase value because their investment in creating new products is still weak.
Lan Anh & Pham Ky