New capital flow, new taste from Korean investors

Dec 13, 2021

Korea has always been the largest foreign investor in Vietnam, but what Vietnam is looking forward to is a resurgence and investments in strategic industrial sectors.

Investment taste newly shaped

Exactly 1 month ago, SK Group announced its decision to spend $340 million to buy shares of The CrownX, a retail consumer platform that merges Masan's interests in MasanConsumer Holdings and VinCommerce (now renamed WinCommerce). After this deal, SK's ownership rate in The CrownX is 4.9%.

Previously, in April 2021, SK Group bought 16.26% of VinCommerce shares in Masan with a total cash value of $410 million.

SK Group's deals have contributed to "heating up" Korean investment flows into Vietnam, specifically in this case through mergers and acquisitions (M&A) activities. Since last year, Korean investment in Vietnam, especially in the form of M&A, has shown signs of slowing down due to the epidemic.

But sharing at the Vietnam M&A Forum, with the theme "Opportunities in a booming market", a representative of KPMG said that despite the impacts of the Covid-19 epidemic, Korean investors still consider Vietnam is one of the most attractive markets thanks to its prospects and solid economic growth.

According to him, the areas that attract the attention of Korean investors include e-commerce, financial technology and logistics. “Korean businesses have high expertise in these areas, especially in financial technology. They believe they can contribute to partners in the value chain and the market in general,” said KPMG.

In fact, after a wave of Korean investors, such as Samsung, LG, Hyosung... poured a large amount of money to build production bases in Vietnam, in recent years, Korean investment capital has trend of shifting to non-manufacturing sectors, especially finance - banking,  retail. Investments through M&A activities also accelerated. The new investment "taste" of Korea has gradually been shaped, although at this moment, up to 73.5% of the total investment capital of this partner in Vietnam is in the field of processing and manufacturing. .

New capital flows and new tastes have made an important contribution to helping Korea maintain its position as the largest foreign investor in Vietnam, with a total registered capital of over $74 billion by the end of November 2021.

Even in the past 11 months, although Singapore's investment capital was 1.74 times higher than South Korea's ($7.6 billion and $4.35 billion), but in the assessment of the Foreign Investment Department (Ministry of Foreign Affairs). Planning and Investment), this partner's investment in Vietnam is still very active.

Looking forward to the boom again and “strategic” investments

Investment capital from Korea is still flowing into Vietnam. A very clear proof is that, Samsung is still actively investing in building a Research and Development Center (R&D) in Tay Ho Tay Urban Area (Hanoi), with an investment capital of over 220 million USD. As planned, this project will be completed by the end of next year, making an important contribution to turning Vietnam into a major Samsung R&D center globally.

The information has just been reported by Mr. Choi Joo Ho, General Director of Samsung Vietnam to Deputy Prime Minister Le Minh Khai, up to now, Samsung has invested in Vietnam with 17.74 billion USD, all investment commitments of Samsung Samsung has been disbursed.

Meanwhile, since the beginning of this year, LG Display alone has increased investment capital twice, with a total capital increase of up to 2.15 billion USD. This is a very meaningful capital in the context of the Covid-19 epidemic affecting global investment flows.

Or most recently, it can be mentioned that Amkor Group's plan to invest $ 1.6 billion in a semiconductor project in Bac Ninh can be mentioned. Amkor is based in the US, but the founder is a Korean investor.

The move is quite positive, but in fact, these investments are not enough to bring investment capital from Korea into Vietnam "booming" as in the previous period. However, quite optimistic, Mr. Hong Sun, Vice President of Korean Business Association in Vietnam, always affirmed the interest of Korean investors in Vietnam.

“Covid-19 is having a heavy impact on the supply chain. If Vietnam takes measures to handle this issue and continues to be successful in fighting the Covid-19 epidemic, it will further strengthen the confidence of foreign investors," said Mr. Hong Sun.

Referring to the story that next year Korea and Vietnam will celebrate the 30th anniversary of the establishment of diplomatic relations, Mr. Hong Sun expressed his expectation that this will be an opportunity for the two sides to further promote investment cooperation. .

In fact, the recent trend is, Korea is still investing quite a lot abroad. Recently, Samsung Group has announced a plan to invest in a chip factory worth 17 billion USD in Texas (USA).

Not stopping there, Samsung a few days ago also planned to invest 240,000 billion won ($205.64 billion) in the next 3 years to strengthen its global position after the pandemic. The investment will be used to expand operations in the pharmaceutical, biological, artificial intelligence, semiconductor and robotics industries.

Just "squeezing" into this investment chain of Samsung, Vietnam's opportunities are huge.

From another angle, it is said that in the past 2 years, Korean investment in China has increased sharply, mainly in large-scale projects in the fields of Li-ion batteries, semiconductors, and components. These are projects that go against the trend of withdrawing capital from China and are also projects that Vietnam aspires to attract, but has not yet prepared the foundation to successfully attract.

According to the Foreign Investment Agency, in the coming time, Vietnam will continue to attract small and medium-sized projects from Korea with the goal of finding strategic production bases for export and finding find new markets.

However, what Vietnam expects is to be able to attract large projects in strategic industrial sectors of Korea, such as the electronics industry, the semiconductor industry, the automobile industry, the packaging industry, and the electronics industry. ship and battery industry. This is not simple, because Vietnam will face many challenges related to market capacity, supporting industries, human resources, infrastructure, logistics, as well as industry development policies, priorities. investment offer…

“Korea, although only ranked second in terms of investment capital, is the leading partner in terms of the number of new investment projects, the number of projects that adjust capital as well as the number of times of capital contribution and share purchase. Thus, in terms of the number of projects, Korea is the partner with the most investors interested and making new investment decisions as well as expanding investment projects in the past 11 months.

- Mr. Do Nhat Hoang, Director of Foreign Investment Department (Ministry of Planning and Investment)