Korea currently has about 8,000 companies manufacturing and doing business in Vietnam. Most Korean FDI companies in Vietnam invest in the manufacturing sector, which plays an important role in the global supply chain.

GREAT INVESTMENT COOPERATION OPPORTUNITIES

At the May 8 seminar “Korea-Vietnam Trade and Investment: Finding Distressed Opportunities” organized by the Vietnam International Arbitration Center (VIAC) in cooperation with the Korea-organized Commercial Arbitration Committee (KCAB), Mr Hong Sun – The chairman of the Korean Business Association in Vietnam (Kocham) said that Korean investors came to Vietnam very early, since 1992.

So far, Korea’s foreign direct investment ranks first in Vietnam with a total capital of US$80.5 billion. Korea also ranks 2nd in development cooperation, tourism and labor and 3rd in trade cooperation with bilateral trade turnover of 88 billion in 2022.

However, the first quarter of 2023 saw a sharp drop in investment capital of more than 70% compared to the first quarter of 2022. The reason, according to the Kocham representative, is the influence of the global economy, the crashed won exchange rate, interest rates are high etc. While Vietnam is the manufacturing hub of the world, global economic demand is directly affected by Vietnam. From the end of 2022, orders fell sharply.

Although the global economy still faces many difficulties and challenges, Vietnam is still an attractive place for foreign investors in general and Korean companies in particular, according to Mr. Hong Sun. The Vietnamese government is very good at attracting foreign direct investment, investors are quite comfortable investing in Vietnam.

Mr. Dau Anh Tuan, Deputy Secretary-General and Head of Legal Department of Vietnam Trade and Industry Confederation (VCC), also assessed that Vietnam’s opportunity to attract foreign direct investment is still very large.

Vietnam is a country with a fast growth rate, the speed of change in Vietnam is absolutely reliable, the economy is moving in a more favorable direction, more open, more business opportunities. Vietnam from a closed economy to a centralized economy now has the highest openness in the region, with import and export turnover exceeding 200% of GDP.

Vietnam’s export structure is now again on a more positive sign, the export share of electronic goods, equipment, technology, machines… is quite large.

Vietnam in particular has many advantages and is a motivation for investors to choose Vietnam because the costs (infrastructure costs, electricity, staff, taxes, etc.) are relatively affordable. There are also benefits from the free trade agreements (FTAs) signed by Vietnam, especially free trade agreements with large markets.

In addition, Vietnam’s human resources are currently very cheap, the working age group from 15 to 60 has the highest rate in the region. With the increasing quality of FDI inflows, Vietnam will soon become a special production location in the high-tech sector. “Vietnam’s medium and long-term business prospects are currently very positive and optimistic,” emphasized Mr. Tuan.

CONTINUED REFORM OF THE REGULATORY ENVIRONMENT MORE PERFORMANCE

However, Mr. Hong Sun frankly said that during and after Covid-19, some investment procedures in Vietnam were still difficult and project implementation was still slow.

For foreign investors, time is an important issue. When management procedures and licensing are slow, it impacts the organization’s deployment plan and impacts orders.

“Many Korean giants investing in Vietnam are still struggling to get permits and project implementation has to wait a long time, for example, energy projects with investment capital of up to USD 3-6 billion. The delay in approving Power Plan 8 Korean companies don’t know whether the waiting time is 1-2 years or longer, they are confused whether to invest in other areas or wait longer,” said Mr. Hong Sun. For example.

In addition, visas, work permits, etc. are difficulties in entering Vietnam. The waste of time and money is not big, which still discourages Korean companies from investing in Vietnam.

In order to promote investment and trade cooperation between the two countries in the coming period, Mr. Hong Sun hopes Vietnam will continue to pursue reforms in a favorable legal environment, promote administrative procedure reform and reduce paperwork to help Korean investors feel Be sure to invest in companies and do long term business in Vietnam.

According to the representative of Kocham, Vietnam’s legal regulations are a bit too strict: “I think that in the current situation, there is no need to treat such regulations, such as fire prevention and suppression regulations, so elaborately in the past. Companies are still working normally, but when there are new standards, companies have to invest more and wait a long time. Or in the case of work permits, the Ministry of Labour, War Invalids and Social Affairs is adapting Decree 152, but it is still a long time coming. Vietnam needs to relax policies on work permits, temporary residency permits, and child permits and fire protection permits.

In addition, Mr Hong Sun said that not only is Vietnam currently competing with developing countries and countries in the region for investment, but the US, EU and Japan and their prime ministers are also becoming “receiving partners”. 1 investment market”… If Vietnam lags behind in investment attraction policies, it will lose the opportunity to attract foreign direct investment.

In order to avoid risks when investing in Vietnam, Mr. Hong Sun recommended that investors pay attention to legal issues in Vietnam. “Many Korean manufacturing companies have not yet paid attention to this issue. Not only do you need to get an investment license and be done, but you need to carefully review the contracts and legal issues and seek clear advice from reputable law firms right at the start of the license application.

according to dr Vu Tien Loc, chairman of VIAC, trade disputes tend to increase in the world with many strong movements and fierce competition. The business world is in its most difficult phase. In addition to further diversifying and diversifying partnerships and customers to spread risk and strengthen cooperation with partners, close friends are strategically intended as safe havens for business careers.

In addition, business cooperation companies must pay attention to legal issues, mutual protection contracts, avoid risks in order to cooperate sustainably.

“The Vietnam International Arbitration Center, the Korean Business Association in Vietnam, the Korean Commercial Arbitration Commission with a large network of lawyers, experts and experienced arbitrators, as well as expertise in dispute resolution and legal advice. This will be a safe fulcrum for Vietnamese and Korean businessmen in their business and investment relations in the coming period,” said Mr. Loc.