During the last two decades since the establishment of diplomatic relations, Vietnam and Korea have enjoyed considerable development in cooperative relations. Korea is now the largest foreign investor in Vietnam, at over US$23 billion. Both sides have set up an ambitious target of US$20 billion in bilateral trade by 2015.Kim Jai Woo, Chairman of Korea Chamber of Commerce and Industry (KOCHAM), shares with Vietnam Business Forum about Korean investment trends in the coming time. Duy Khang reports.
Korean investment in Vietnam is now moving from light industries to heavy industries, according to you, what makes this shift?
Korean companies have previously showed interest in light industries in Vietnam such as footwear and garments to take advantage of cheap labour. However, the income of Vietnamese people is gradually increasing, so many Korean investors start to pay attention to local market in Vietnam. One of the typical examples is Posco Vietnam. In addition, with a stable production foundation of Southeast Asia region, skilled workforce plus developed infrastructure of Vietnam, more and more Korean products are popular in Vietnam like mobile phones of Samsung, spandex of Hyo Sung, wind turbines of CS Wind, tyres of Kumho, etc, and these contribute to the export volume growth of Vietnam.
Generally speaking, due to an increase in minimum salary together with shortage of labourers, light industries such as garment & textile are not much paid attention, so it seems to be the right decision that Korean investors are moving to heavy industries in Vietnam.
How do you evaluate the cooperation between Vietnamese and Korean enterprises?
I think that the traditional cooperation between Vietnam and Korea in textile & garment sectors as well as in other light industries will be well developed. However, in some new fields such as heavy industries, it is a little hard for Korean investors to find suitable Vietnamese partners. So the Vietnamese government needs to strongly strengthen supporting industries.
In 2012 and following years, what strategic plans are worked out by KOCHAM to help Korean and Vietnamese enterprises further cooperate?
KOCHAM will continue to make efforts for members’ benefits, as well as to improve the friendship and cooperative relationship between Vietnam and Korea. Like what KOCHAM has done in the last few years, as a representative organization of over 1,700 Korean enterprises doing business in Vietnam, we will focus on consulting and cooperating with the Vietnamese Government. In addition, KOCHAM will link with other Vietnamese economic organizations such as VCCI to make efforts for the common benefit of both sides’ enterprises.
What necessary changes in terms of investment from the Vietnamese side do you expect to attract more potential investors from Korea in the near future?
It is crucial for Vietnam to build supporting industries. Unlike before, Vietnam now needs a complicated structure of industries. A well-prepared supporting industry is necessary for Vietnam to support these complicated industries. Through this process, it will help improve the competitiveness of Vietnamese industries.
To build up a support industry, there should be friendly policies for foreign investors in related fields. Previously, there were only regional incentive policies for investors. In the future, it is necessary to classify or sort out clear policies in industry and engineering fields, and there should be long-term strategies to maintain foreign investments.
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