Vietnam and Korea have joined forces to enhance commercial and investment relations

DNHN - Korea is the largest investor in Vietnam, but in addition to huge corporations, Vietnam requires measures that encourage Korean small and medium-sized businesses to return to the country.

Korea is Vietnam's top investor

Vietnam-Korea ties have evolved into one of the best and most significant cooperative connections in Asia in general, and East Asia in particular.

Korea is now the largest investor in Vietnam; it is the second largest ODA, tourism, labour partner, and third largest commercial partner (after the US and China), with a bilateral trade turnover expected to reach 78.1 billion USD in 2021. Korea's trade turnover with Vietnam is estimated to exceed USD 100 billion by 2023.

In contrast, Vietnam is the centre of Korea's southern policy in the ASEAN area, accounting for more than 40% of overall commercial turnover between Korea and ASEAN nations.

The Korea - Vietnam Economic Support Committee (KVECC) in particular has helped firms in both nations obtain new economic prospects. Through collaboration with ministries of local government, as well as the Vietnamese government and firms with Korean skills and technical advantages, KVECC has helped to link, develop, and explore the possibilities of cooperation between the two markets.

"Korea and Vietnam share many similarities," said Mr Kwon Jae Heang, President of KVECC and Chief Representative of the Korean Multicultural Organization. We learnt about policies in both countries through the Embassy, then presented suggestions to relevant authorities to see if there are any beneficial policies for Vietnamese firms to join Korea, and we talk about this a lot."

However, Prof. Ha Ton Vinh, Senior Consultant for Asia at the World Bank, emphasized that while labour in Vietnam is inexpensive, this is not a permanent advantage.

"At some time, foreign-invested firms, such as Korea, will realize that Vietnamese employees are no longer cheap, that Vietnamese talents cannot be developed, and they will turn elsewhere, such as Bangladesh or Laos... We will lose strength at that point.

As a result, the government, people, and companies must work together to support, assign, and provide jobs to businesses. "The government just controls, monitors, and protects fair competition interests, but entrepreneurs must take the lead," Prof. Ha Ton Vinh remarked.

Connecting small and medium-sized firms (SMEs) to the "flow" of investment.

On the morning of August 27, 2022, at the economic seminar "Promoting Economic Cooperation between Vietnam and Korea" organized by Enterprise and Integration Magazine in collaboration with KVECC, Dr Vu Tien Loc - Chairman of the Center International Finance Corporation (VIAC) - emphasized that the key factor determining the future success of Vietnam-Korea cooperation is not large enterprises, but SMEs.

How local SMEs are not left out of bilateral collaboration how can Korean businesses connect with the Vietnamese SME community so that they can become suppliers in the global supply chain of leading Korean brands, rather than a leading Korean corporation bringing their entire ecosystem to Vietnam, will not provide development opportunities for domestic SMEs

"When FDI in Vietnam does not connect with the local SME community, it will not be able to take root in the Vietnamese market, and we will not be able to develop a durable connection, which is a very crucial prerequisite," explained Dr Vu Tien Loc.

SMEs are the foundation of economic progress in every country on the planet. As a result, SMEs must form the backbone of the Vietnam-Korea economic cooperation partnership, not merely the main multinationals. This is a small issue that must be resolved.

"At the moment, there are legal difficulties, administrative processes, and support policies, particularly policies to help Korean SMEs that can return to Vietnam, and particularly policies to support SMEs." "Vietnamese SMEs may link with huge Korean enterprises, which is an important direction," Dr Vu Tien Loc highlighted.

Vu Long