This week, Vietnamese State President Nguyen Xuan Phuc pays an official visit to South Korea, where both nations are expected to officially elevate their existing strategic partnership to a comprehensive strategic one.

The new ties will mean more mechanisms and incentives for both countries to boost the relationship, with enhancement of trade and investment considered one of the largest cooperation pillars.

Such ties are currently backed by free trade agreements (FTAs) such as the Korea-Vietnam FTA, the ASEAN-Korea FTA, and the Regional Comprehensive Economic Partnership. South Korea also wants to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to which Vietnam is a member.

Hong Sun, vice chairman of the Korea Chamber of Business in Vietnam (KorCham), which represents about 9,500 South Korean companies in the country, told VIR that a number of big investors are planning to pump billions of US dollars in Vietnam to take advantage of these FTAs, and ahead of South Korea’s accession to the CPTPP and more favourable conditions to be created by an upcoming comprehensive strategic partnership.

“Such investors are now working with the government, relevant ministries, and localities for their projects, which will operate in manufacturing, high technology, and electronics,” Sun said.

South Korea adopted a scheme in April to partake in the CPTPP as it wants to diversify its export portfolio and expand investments overseas. Vietnam will, together with other member economies, work with South Korea on its plan to join the deal.

“The CPTPP will offer a huge opportunity to South Korean companies to invest in and expand trade with Vietnam because the nation offers big potential,” Sun said, adding that the most interesting sectors in Vietnam are consumer goods, manufacturing, electronics, garments and textiles, finance and banking, and agriculture.

Last week, South Korea’s Solum Electronics Vietnam was granted an investment certificate in the northern province of Vinh Phuc to increase its capital for the fifth time for producing electronics and communication equipment. The capital has been raised from $110 million to $155 million.

Located at Ba Thien Industrial Park (IP), the factory currently employs 3,100 local workers and produces over 360,000 products a year. “We hope that with this expansion, the investor will continue actively performing, with a monthly revenue of as much as $55 million, and pre-tax profit of about $10 million a year,” said Nguyen Van Bo, vice head of the Investment Management Division under Vinh Phuc Industrial Zones Management Authority.

Other names like Samsung, LG, SK, and Lotte are expected to continue investing in Vietnam in the coming time.

Local media recently cited Samsung Electronics Group as reporting in its financial statements for the second quarter of 2022 that the total revenues of Samsung Thai Nguyen, Samsung Bac Ninh, Samsung Display Vietnam, and the Samsung HCMC CE Complex was $17.9 billion, up 30 per cent on-year.

The respective revenues and profit was $7.9 billion and $770 million from Samsung Thai Nguyen; $4.7 billion and $400 million from Samsung Bac Ninh; $4.1 billion and $40 million for Samsung Display Vietnam; and $1.3 billion and $100 million for Samsung HCMC CE.

Over the past few weeks, Samsung has been accelerating the completion of its research and development centre in Hanoi, which will become officially operational soon.

It is estimated that this group has invested more than $18 billion in Vietnam to date, and it is now also planning to pour an additional $3.3 billion in the nation. Samsung has set a target of earning an export turnover of $69 billion this year, up from $65.5 billion last year.

Early this year, South Korea’s Daewoo was licensed for new projects worth $2 billion in Vietnam, while Amkor Technology was licensed in the northern province of Bac Ninh to implement a $1.6 billion semiconductor manufacturing project.

“The Amkor project is huge, with the application of high technology,” Sun said. “It is mirroring a rise in South Korea’s investment into Vietnam in the semiconductor industry, whose products are now in serious shortage globally. Thus, when this venture becomes operational, Vietnam will be better known for this product,” Sun added.

According to Vietnam’s Ministry of Planning and Investment (MPI), the total accumulative registered investment capital into Vietnam from South Korea as of November 20 hit $80.8 billion, making this Northeast Asian economy the largest foreign investor of the Southeast Asian economy, followed by Singapore at $70.75 billion and Japan at $68.77 billion.

“When it comes to the number of projects, South Korea remains the biggest foreign investor with new investment decisions, expansions of operational projects, and stake acquisitions and capital contributions in the first 10 months of 2022 – accounting for 20.7 per cent of new projects, 33.2 per cent of projects with newly added capital, and 34.1 per cent of stake acquisitions and capital contributions, according to the MPI’s Foreign Investment Agency.

Two-way trade turnover stood at $78 billion last year, with Vietnamese exports worth $21.9 billion and imports of $56.1 billion, and $80.7 billion in the first 11 months of this year – with Vietnamese exports and imports of $22.5 billion and $58.2 billion, respectively, reported the Ministry of Industry and Trade.