Surpassing the United States and Japan, South Korea has established itself as Vietnam’s largest and most important foreign investor. Less than a month ago, over 100 businesses from South Korea and Vietnam signed a Memorandum of Understanding (MOU) at the Vietnam-Korea Business Forum during the visit of South Korean President Yoon Suk Yeol to Vietnam.

In addition, Mr. Do Nhat Hoang, General Director of the Foreign Investment Agency, revealed that billion-dollar projects are expected to pour into Vietnam in the near future. “We have a list of dozens of projects waiting, some worth a few hundred million USD, but also projects worth billions of USD,” reported Mr. Hoang.

Major projects underway

While specific project details have not been disclosed, several key names have been mentioned. For instance, T&T Group, in partnership with a Korean firm, is set to develop an LNG (Liquefied natural gas) and hydrogen project. The two parties will collaborate to develop LNG power projects in Vietnam, and transition existing coal-fired power projects from Power Development Plan VIII to LNG power, in accordance with government policy.

Furthermore, both parties will explore opportunities to participate in hydrogen production projects to meet the demands of commercial power projects. Other power projects will be developed, constructed, and operated in the near future, consistent with the long-term strategy and direction of the Vietnamese Government in Power Development Plan VIII.

In another example, N&G Group Joint Stock Company (Vietnam) and SEIN I&D Co. Ltd from Korea have signed a cooperative investment contract to construct the “Vietnam-Korea Techno Park” in the South Hanoi Supporting Industrial Park. They will collaborate in the investment and construction of infrastructure and specialized facilities for the invention, production, and application of micro-chip products, adhering to high-tech global standards. This will lead to the establishment of the Vietnam-Korea Techno Park, set to span around 200 hectares. Specifically, in a meeting between representatives of leading South Korean conglomerates and Prime Minister Pham Minh Chinh ahead of the Vietnam-Korea Business Forum, many Korean enterprises made commitments to invest in Vietnam.

Chairman and Chief Executive of LG Corporation, Mr. Koo Kwang-mo, revealed that LG is planning an additional USD5 billion investment in Vietnam in the near future. Likewise, SK Group is looking toward a USD1.3 billion investment in renewable energy in addition to its current billion-dollar investments.

Earlier, Chairman & Co-Chief Executive Officer at CJ Corporation, Mr. Sohn Kyung-shik, had a private meeting with Minister of Planning and Investment Nguyen Chi Dung, to discuss CJ Corporation’s ongoing investment in establishing a logistics center and investing in developing other sectors such as veterinary medicine, biotechnology, and renewable energy projects.

“Special interest”

Mr. Jung GiTaek, Executive Manager of Shinwoo Viet Nam Co., Ltd, a Korean firm specializing in producing Royal Korean red pine oil, has stated that Vietnam is becoming a “special interest” market for South Korean businesses in the Southeast Asian region.

“A few years ago, Vietnam was chosen by many South Korean enterprises, but not in large numbers. However, nowadays, more and more South Korean businesses are recognizing the allure of Vietnam’s developmental potential, and thus the wave of South Korean enterprises entering Vietnam is significantly strengthening,” said Mr. Jung.

Compared to regional competitors like Myanmar, Thailand, and Indonesia, many believe that Vietnam currently holds a competitive edge. For instance, while Myanmar is an emerging market, it falls short of Vietnam in terms of infrastructure. The labor costs in Thailand and Indonesia have recently surged. Particularly, Vietnam is the most “open” country in the ASEAN region, as it has joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Free Trade Agreement (FTA) with the EU.

South Korea began investing in Vietnam in the 1990s and quickly became a major investor. Foreign investment from South Korea has notably accelerated since the two countries established a strategic partnership in 2012. Their total registered investment capital has skyrocketed to USD 81.5 billion.

Chart: South Korean investment in Vietnam from 2013-2023 (Unit: Billion USD)

Last year, South Korea invested nearly USD 5 billion in Vietnam, but the first five months of this year saw only over USD 666 million. “However, this number does not accurately reflect the true state of South Korea’s investment,” insisted Mr. Hoang, revealing that major conglomerates are still nursing substantial projects and cautiously observing the situation.