POSCO to Boost Cooperation with Vietnam on Climate Change

5:37:13 PM | 10/26/2022

At the seminar "Promoting the flow of Korean flows into Vietnam" held by Vietnam News on October 18 on the occasion of 30 years of establishing diplomatic relations between the two countries, Mr. Yoon Chang Woo, General Director of Posco Vietnam, said: gave interviews on some contents about Posco's operations and expectations in Vietnam in the coming time.

As an HQ enterprise investing in Vietnam since the early days, what are Posco's criteria for choosing an investment location? The provinces in which Posco invests, what do you think about the existing incentives?

In the case of an enterprise investing abroad, there will be many issues to consider. Typical examples here include an abundant, high-quality labor force, a potential market, a location that can facilitate the movement of goods, and infrastructure such as electricity, water, political stability, etc. In my opinion, these are the key factors that need to be considered.

At the time of considering an investment in Vietnam, our POSCO group actually considered the above investment conditions. To be honest, when POSCO started investing in the early 1990s, most of the conditions didn't meet the criteria we developed in the evaluation categories. However, realizing Vietnam's abundant young talent and potential for economic development, POSCO has come to an investment decision.

According to our POSCO assessment, Vietnam has been providing an abundant labor force and the economy has been continuously growing. However, the fact that the development of the spare parts industry using steel raw materials has not been able to accelerate. If we look at the fields that must use steel materials such as construction, shipbuilding, automobiles, and machinery that require the use of steel, the field of steel used in construction such as rebar and coil has grown significantly. . However, high-grade steel products that need to be supplied for cars and machinery, etc., are in a situation where the growth is not as fast as expected. In my opinion, in order to be able to supply high-quality steel materials in areas such as automobiles and machinery, etc., the Vietnamese government needs to pay special attention to promoting the spare parts industry.

Our group is currently established and is operating legal entities in the provinces of Vung Tau and Dong Nai, etc. And the local authorities in the respective provinces are also actively supporting our group companies. Especially, in the context of the recent Covid-19 epidemic, in my opinion, thanks to the active and enthusiastic support from the local government for businesses, we were able to work together and overcome great hardships. On this occasion, I would like to express my sincere gratitude to the leaders and officials of the Vung Tau and Dong Nai provinces.

In addition, in the case of the southern provinces, up to now, there seems to be no significant impact from the human resource supply or key infrastructure. However, in the future, in the event that more enterprises will participate in the investment, there is concern that investment conditions may deteriorate due to limitations in human resources and infrastructure. Even now, in the case of the Northern region, where many Korean enterprises have exported on a large scale, there have been complaints from enterprises about the shortage of human resources to supply.

What is the current investment orientation of enterprises in Vietnam in the near future to match the policy of attracting new generation (high-quality) FDI in Vietnam?

As I understand it, perhaps the question here points to the point that although up to now, labor-intensive industries have entered Vietnam, in the future, it is time to need technology-intensive industries the art of entering Vietnam.

Up to now, the automotive and electronics sectors, etc., focusing on the textile, footwear, and assembly industries, have been promoted to Vietnam, but in the future, compared to the present time, it is necessary to enter Vietnam. It is necessary to have a new wave of stronger FDI investment in Vietnam for groups of industries that use high technology.

However, there is a point we all need to consider. As you know, Korean companies like Samsung Electronics, the company that makes the most advanced smartphones, and LG Electronics, the maker of home appliances are ranked as the best in the world. , have all focused on promoting in Vietnam. And I think these are all businesses from specialized technology-intensive industries. However, because Vietnamese enterprises have not been able to provide the highest quality components for Samsung Electronics and LG Electronics, up to the present time, most of these parts are still imported from Korea and used.

In addition, for the automobile industry, domestic automobile enterprises such as Vinfast, Truong Hai, and Thanh Cong are actively producing, but in the form of importing components and assembling. The reality is that the growth of the auto parts manufacturing industry is still limited.

If Vietnam wants to attract FDI in the most advanced and advanced technology fields, from my perspective, I think the Government needs to have a specific plan to build and nurture the spare parts industry ecosystem, accompanied by accompanying policy support.

Of course, it is also possible that I am sharing this statement with you at the moment when I have not fully grasped the policies of the Government of Vietnam. The Vietnamese government may already have detailed plans and policies in place. If there is preparation, I think it is necessary to quickly put it into practice. Besides, as far as I know, issues such as the transfer of technology and technology of the invested enterprises are also being discussed a lot. However, on the one hand, I think that technology transfer can only become possible when Vietnamese enterprises have enough capacity factors. According to recent news, many Japanese and American businesses are increasing exports to Vietnam, and Apple, a global enterprise, has also decided to manufacture products in Vietnam. I think we should be quick to take advantage of opportunities like these.

In particular, it is forecasted that in the future the number of electric vehicles will gradually increase, and Vietnam's VinFast company is also in the process of producing electric vehicles. Maybe you here know our POSCO Group is mainly a steel corporation, but actually, POSCO Group is a business that provides general materials. In particular, we are a business that can supply materials for electric vehicles.

If there is a chance in the future, we can also consider investing in the field of materials used for cars such as bipolar and cathode battery materials, applications such as electric car batteries, or developing electric steel, rare earth mines, and a permanent magnet, etc, application as an electric driving motor.

Vietnam is implementing strong COP26 commitments, what plans does the company have to support the Vietnamese government to implement?

As all of you here will admit, responding to climate change is a global issue. Of course, many developed countries seem to be well prepared. However, most countries are aware that there is still a lack of preparation for the future implementation of Net Zero. Net Zero, the content declared by the Government of Vietnam at COP26 towards 2050 is a really big challenge. The same is true for Korea.

In this regard, POSCO has established a 'carbon-neutral baseline for 2050 in Korea by October 2021' and is currently working to achieve Net Zero in the shortest time possible. And where the biggest reciprocal activity I can recommend is to reduce the amount of carbon that can be generated by using a large amount of coal to make steel, we are now officially promoting the development of this method. Hydrogen-reduced steel production method - a method of using hydrogen after changing the method of steel production by blast furnaces so far.

We at POSCO have developed and commercialized the FINEX method, a steelmaking method that significantly reduces the generation of pollutants. However, FINEX steelmaking still requires large amounts of coal, so we are also promoting the development of a hydrogen-free steelmaking method that produces no carbon dioxide.

Our POSCO Group's legal entities are operating in Vietnam and currently mainly invest in the rolling business. However, with a focus on POSCO Vietnam, we have been promoting cooperation with the Steel Association regarding Net Zero. And we also plan to support exchange and cooperation, etc… with Korea Steel Association.

For example, in response to CBAM (Carbon Border Adjustment Mechanism) - expected to be implemented in 2023, we are actively promoting cooperation to work with the Steel Association to prepare the reciprocal.

We are determined and prepared to work together to overcome these challenges by actively cooperating as much as we can when guiding the policy direction of the Government of Vietnam on climate change response establish.

Thank you!

Source: Vietnam Business Forum