Investing in Vietnam: Korea has no competitors

Investing in Vietnam: Korea has no competitors

An interesting chance meeting with three Korean investors took place at noon on September 23, 2016, right after the Foreign Investment Department (Ministry of Planning and Investment) officially announced data on attracting foreign direct investment (FDI) in the first 9 months of 2016, according to which, Korea still ranked first in the list of countries and territories investing in Vietnam, with 5.587 billion USD. They are Mr. Lee Jae Hee, Deputy General Director of Chung Phat Co., Ltd. (Hung Yen), Mr. S.T.Woo, Chairman of Solapark Global I&D Co., Ltd and Mr. Hong Nam Pyo, Chairman and General Director of GOMAX I&D Company.

Of these three businessmen, Mr. Lee Jae Hee is participating in running a Korean company specializing in packaging production, which went into operation 10 years ago and is currently a satellite business for Samsung, with a scale of 2,000 employees.

Korean businesses are present in every "nook and corner"of Vietnam's economy from industry, construction, to food, logistics, culture - entertainment...

Meanwhile, Mr. Hong Nam Pyo is working with GOMAX to pursue the project horse racecourse in Vinh Phuc, with a scale of 1.5 billion USD, which the Investment Newspaper just mentioned. Currently, Mr. Hong is looking to connect with Vietnamese authorities to propose ideas for developing horse farms in Vietnam.

And Mr. S.T.Woo is living and working in Korea, but is still going back and forth to realize the plan to build a solar power plant on Upper Ea-sup Lake (Dak Lak). In April this year, Solarpark signed a memorandum of understanding with the People's Committee of Dak Lak province on implementing this project with an expected scale of about 300-500 MW, investment capital from 600 million USD to 1 billion USD.

"We are still in the project preparation phase. Because this is a project built on water, the investment capital will be larger than building on the ground. We are also trying to negotiate to achieve a higher electricity price," said Mr. S.T.Woo.

Obviously, even though we don't want to mention the phrase "wave", because it has become... boring when the Vietnamese media mentions too many investment waves from Korea or Japan into Vietnam, we still have to admit that the trend of more and more Korean investors pouring capital into Vietnam is not controversial. The evidence is in the figure of nearly 5.6 billion USD of FDI capital that Korean investors have registered to invest in Vietnam in the past 9 months. The evidence is in the investment determination of the three investors mentioned above. And the proof is that a series of Korean investors have and are continuing to invest capital in Vietnam.

More than a week ago, LG Innotek, a subsidiary of LG Group, received the Investment Registration Certificate to implement the Camera Module Factory Construction Project, with an investment of 550 million USD in Hai Phong. Thus, this will be the third project that LG invests in this locality. The first project is a complex manufacturing household electronic devices, with an investment capital of 1.5 billion USD. This project officially held an inauguration ceremony in March 2015, although production began in October 2014.

In the middle of this year, LG Display was again granted an investment registration certificate for a 1.5 billion USD project, specializing in manufacturing and processing high-tech display products (OLED). This project is expected to go into operation in the first half of 2017. And now, adding LG Innotek, LG's total investment capital in Hai Phong has reached 3.55 billion USD, although still "losing" to the 15 billion USD that "compatriot" Samsung poured into Vietnam, but still a not small investment. LG is also gradually turning Vietnam into its new production base, the same way Samsung has been doing to turn Vietnam into its complete global production base.

Meanwhile, in March, when talking with a reporter from Investment Newspaper, Mr. Chang Bok Sang, Chairman and General Director of CJ Vietnam Group, said that in 2016, CJ will invest an additional 500 million USD in Vietnam, bringing CJ's total investment capital in Vietnam to reach 900 million USD. This capital will be invested by CJ in two forms, investing in building new factories and promoting mergers and acquisitions (M&A), as well as expanding the CGV cinema system. And it is true that not long after that, CJ pursued the purchase of shares in Vissan and Duc Viet sausage. However, in the deal with Vissan, CJ "lost" to Masan, and in the deal with Duc Viet sausage, CJ forcedhad to "give way" to another "compatriot", Daesang Corp. Up to this point, not much official information has been announced, but the fact that the owner of the Miwon brand spent 32 million USD (about 770 billion VND) to buy back 99.99% of the shares of Duc Viet Food Joint Stock Company (Duc Viet) no longer surprised public opinion.

Clearly, the new investment trend, plus the participation of large Korean industrial corporations such as Samsung, LG, Doosan, Kumho, Posco, Lotte, GS, Hyosung in the past, as well as the increasing number of Korean small and medium-sized enterprises investing in Vietnam as satellite investors for Samsung, LG..., Korean businesses are present in every "nook and corner" of the Vietnamese economy, from industry, construction to food, logistics, culture - entertainment...

And with accumulated investment capital now reaching over 50 billion USD, Korea has become an... unrivaled investor. It will be difficult for any investor to catch up with Korea to take the leading position. Moreover, according to the opinion of Professor - Dr. Nguyen Mai, an expert on FDI, the important thing is that Korean FDI is completely consistent with the new orientation of the Vietnamese Government in improving the quality and efficiency of FDI capital flows. Many large-scale projects of Korea, such as Samsung and LG, have become the driving force for growth and development for an economic region of Vietnam.

"The fact that Korea has provided aid to Vietnam to build the Vietnam-Korea Institute of Science and Technology (VKIS), as well as committed to transferring more than 100 source technologies and supporting Vietnam to build a technology incubator in Can Tho has also proven the great role of FDI capital from Korea into Vietnam", Professor - Dr. Nguyen Mai said.

However, very honestly, Mr. S.T.Woo said that many Korean investors still come to Vietnam to take advantage of cheap human resources. "But if you only think about that, without bringing modern technology, without bringing knowledge and transferring technology to Vietnam, it is likely that at some point, Korean investors will be pushed out of Vietnam by Japanese and American investors...," Mr. S.T.Woo commented.