The Hanoitimes - South Korea launched a consultative body composed of government and company officials to push for major development projects in Vietnam and the United Arab Emirates (UAE) following President Moon Jae-in`s visits to the two nations, Yonhap quoted the South Korea’s Ministry of Trade, Industry and Energy as saying on April 2.
Senior officials from the state-run energy utilities and construction companies, as well as state-run lenders and trade promotion agencies, held their first meeting to check details of upcoming projects in the two nations.
The consultative body is part of follow-up measures after Moon discussed various bilateral cooperation projects and development assistance during his visits to Vietnam and the UAE in March.
South Korea is Vietnam's second largest
The Ministry of Trade, Industry and Energy said it will classify 25 major projects into three categories -- engineering, procurement and construction; oil field exploration; and build–operate–transfer -- to provide specific support.
Vietnam has also emerged as a major export market as a growing number of Korean companies have established factories and increased investment in the Southeast Asian nation.
Vietnam is expected to announce plans to build new coal-fired power plants to meet its growing energy needs, which have been coveted by the state-run Korea Electric Power Corp. and other construction companies.
Vietnam is South Korea's fourth-largest trading partner, and South Korea is Vietnam's second largest.
South Korea’s investment capital in Vietnam now increases to some US$60 billion, 120 times higher than that in 1992.
Nguyen Van Toan, Vice Chairman of the Vietnam Association of Foreign Investment Enterprises, said that South Korean firms have invested $8 billion each year in Vietnam in the past four years.
South Korea’s foreign direct investment (FDI) in Vietnam has occurred in three waves. The first wave occurred after the lifting of the US embargo, which focused on labor-intensive sectors such as textiles and garments, followed by Vietnam ascension to the WTO wherein investors focused on the manufacturing of electronic goods. The third wave currently focuses on manufacturing as well as consumer goods, retail, and services.
Around 12.5 percent of the total FDI was invested in Bac Ninh province, followed by Dong Nai province, and Hai Phong at 10.8 percent and 10.6 percent respectively. Hanoi accounted for 10.5 percent of the total FDI.
Some 5,000 South Korean companies have invested in Vietnam in the last 25 years. According to the Vietnam Chamber of Commerce and Industry, Korean-invested firms in Vietnam in 2016 contributed almost a third of Vietnam’s exports and provided around 700,000 jobs domestically.
Manufacturing accounts for 70 percent of the cumulative South Korean investments since 1988, followed by real estate management and construction sector at 14.8 percent and 5.4 percent respectively.
Apart from manufacturing, which accounted for 82.3 percent of investments in 2016, there has been a growing interest by South Korean companies in the services and distribution sectors along with, wholesale and retail, culture, and science and technology. In addition, 2017 has seen a considerable interest in the food and finance & banking sectors.
South Korean firms are also looking to increase their investments in the agriculture, forestry, and fishery sectors, taking advantage of the preferential tariffs of Vietnam-Korea Free Trade Agreement.
Samsung leads the pack amongst South Korean investors in Vietnam. It manufactures almost half of its smartphones at its two factories in Vietnam. Samsung is also setting up a third complex focusing on home appliances and displays with an investment of US$2.5 billion.
LG, another electronic giant also has set up a production hub in Vietnam to manufacture smartphones and televisions. The company will be spending around US$1.5 billion in the new hub by 2028.