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Korean investors express confidence
Newly-named South Korean Ambassador to Viet Nam Park Suk Hwan shared his views with Viet Nam News on Viet Nam's investment climate and economic prospects.
How would you assess the trade relationship between Viet Nam and South Korea? As ambassador, what are your policies to expand co-operation?
Since the establishment of diplomatic relations in 1992, the relationship between Korea and Viet Nam has developed dramatically. Trade volume has increased nearly twenty-fold, reaching US$9.5 billion in 2009. Korea's investment in Viet Nam has also increased at a surprising pace, growing over a hundred-fold and making Korea the leading source of foreign investment in the country.
On the occasion of his state visit to Viet Nam last year, President Lee Myung-bak and President Nguyen Minh Triet agreed to upgrade the relationship of both countries into "Strategic Co-operation Partnership".
They agreed to expand bilateral trade to $20 billion per year by 2015 and establish a joint working group to conduct a feasibility study for a free trade agreement.
When I was appointed as ambassador, President Lee stressed the importance of Viet Nam as Korea's friend and strategic partner. Convinced of the need to make our two countries ideal partners in this region, I will do my best to carry out the works agreed upon by both leaders.
How do you see the investment climate in Viet Nam since the 2008 economic crisis? Do Korean enterprises face any difficulties in accessing the Vietnamese market or have any basis for hesitating to invest?
Due to the global economic crisis, there was a significant reduction in foreign direct investment (FDI) in 2009 and Korea was not immune from this trend. However, Korean investors continue to have strong confidence in the potential of the Vietnamese economy and have committed themselves to continue investing here despite the difficult times. In a survey conducted at the end of 2008, 93.4 per cent of 250 Korean businesses operating in Viet Nam responded that they would continue or expand their investment in Viet Nam in 2009 and 2010, even though there was a strong prediction that global FDI would face a serious downturn. This survey has been proven right since recent statistics show that Korea has become the leading investor in Viet Nam, with 2,495 projects amounting to $21.9 billion.
There are many merits and advantages in doing business in Viet Nam. The geographical location is ideal and the country has enormous potential in human resources and domestic markets. Moreover, Korea and Viet Nam share many similarities in culture, history, and customs. The robust commitment to FDI up to $20 billion even in hard times last year clearly reflects that Viet Nam deserves the attention of foreign investors with its ample business opportunities.
Korean businessmen have also indicated the need for improvement in certain areas such as infrastructure, labour, and administrative systems. We are well aware that these are not easy tasks. Nevertheless, we are highly confident that the Vietnamese Government has devoted all the necessary resources to resolve these issues and that the investment environment in Viet Nam will gradually improve.
Have there been any changes in the investment strategies of Korean enterprises since the crisis? In your opinion, what is the role of the Government to attracting foreign investors in the future?
In early 1990's, Korean investors concentrated on labour-intensive industries such as textiles and garments. But this trend has been changing since 2000. Investment from Korea has been diversified into many areas such as manufacturing, steel, electronics, financial institutions, and real estate development. We can literally show many examples such as the Samsung mobile factory in Bac Ninh Province; the Dusan factory in Dung Quat, producing equipment for power plants; the Posco steel plant in Hai Phong; and the Ha Noi Landmark Tower being built by Keangnam.
We believe that the areas in Viet Nam in urgent need of investment are infrastructure, environmental protection and human resources development. The Economic Development Co-operation Fund (EDCF) of the Korean government, as well as private investment, has invested in infrastructure construction. EDCF contributed $200 million to the Ha Noi-Hai Phong expressway, and Korea also provides ODA funding for environmental protection and sustainable development under its East Asia Climate Change Partnership. I believe that Viet Nam will become a major beneficiary in the programme.
With regard to human resources development, Korea has had successful experience in achieving economic development through the power of human resources, and we hope to share our experience with Viet Nam.
In order to attract more FDI, the Vietnamese Government should continue to provide a stable, predictable, and transparent business climate. The active role of the Government is crucial. Comprehensive measures should be timely in addressing the difficulties faced by industries. The terms and conditions of investment contracts should be fully kept as agreed upon with investors. When a contract is carried out as stipulated, it has positive implications for other potential investors.
How should Vietnamese enterprises better access the Korean market?
In order to promote sales in the Korean market, Vietnamese enterprises are taking part in product fairs and exhibitions in Korea. Korean customers have become more familiar with Vietnamese products, and many Korean companies are expanding imports.
Vietnamese enterprises should continue to adjust their products to the tastes of Korean customers and advertise their brand images actively in Korean markets. Greater business co-operation with Korean companies is necessary to look for new market opportunities in Korea.
Inter- and intra-industry co-operation has also expanded and intensified. In many cases, products imported from Korea have been used as parts or materials or equipment in the production of goods destined for export. They have thus significantly contributed to the expansion of Viet Nam's trade with other countries. We expect that bilateral trade between Korea and Viet Nam will continue to grow along with the strengthened co-operation among industries.
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