S. Korea dominates Vietnam’s foreign investment in Q2

By Joel Lee

South Korea topped the FDI in Vietnam in first (Q1) and second (Q2) quarter of this year, with the number of relocating firms soaring in recent months, General Statistics Office of Vietnam (GSO) reports.

Korea came on top at 31.23% with near $2.5 billion investment. Hong Kong and Japan followed with $1 billion and $770 million, respectively.

Over 3,300 South Korean firms now operate in Vietnam, an increase of 500 in the past twelve months. Industry watchers expect the figure will increase to over 4,000 by the end of this year with a wave of subcontractors following the conglomerates.

The number of local workers employed by the firms in Vietnam is roughly 800,000, Korean Chamber of Commerce and Industry in HCMC (KOCHAM) said.

“South Korean businesses are fast at grasping opportunities and making decisions, different from the slow but cautious Japanese investors,” Tran Dinh Thien, director of Vietnam Institute of Economics, told Xinhua news agency. 

The investments have moved from the southern region of Ho Chi Minh City, Dong Nai and Bin Duong to the northern provinces of Hanoi, Bac Ninh and Thai Nguyen, a KOCHAM official told Yonhap News Agency (YNA).

In recent years, South Korean conglomerates such as Samsung Electronics and LG Electronics have relocated their manufacturing operations to the 10-member Association of Southeast Asian Nations (ASEAN) from China due to rising wage and labor demands.

With young demographic base and cheap labor, Vietnam is an attractive foreign investment destination. Manufacturing, information technology and high-tech industries make up a rapidly growing part of the economy.

Vietnam’s GDP growth rate averaged 6.12 percent 2000-2014, and 5.25 percent in the second quarter of 2014 over the previous quarter. GDP growth rate in the Southeast Asian region is projected to be average 5.4% per annum 2014-18, OECD reports.