New overseas policies trigger fresh investment wave in Vietnam

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Vietnam is increasingly becoming an attractive destination to many foreign investors, whose governments have recently boosted policies to consider ASEAN, especially Vietnam, a key partner in their new southern policies.

The Korea Trade-Investment Promotion Agency (KOTRA) last week held a relocation ceremony of its KOTRA Southeast Asia and Oceania headquarters from Singapore to Hanoi, explaining the relocation by the continuous increase in the number of South Korean enterprises in Vietnam.

More Korean investors come to Vietnam under the New Southern Policy. (Photo: Hanoi Times)

“Despite the fact that Singapore is a central country in the Southeast and has its particular advantages, KOTRA has decided on Ha Noi as its new destination because South Korean companies prefer Vietnam’s investment environment to other countries in the ASEAN,” said Kim Ki Joon, chairman of KOTRA Southeast Asia and Oceania cum general director of KOTRA Ha Noi.

Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said the relocation of KOTRA might encourage other organizations to follow suit as well as increase South Korean investment in Vietnam.  

Vietnam is currently an ideal investment destination in Asia, thus the relocation could well be the starting pistol for a wave of similar relocations from Thailand and Singapore to Vietnam, Loc expected.

The move was made after President Moon Jae-in promoted the New Southern Policy (NSP) in a bid to form an axis of prosperity in Asia through linking the northern and southern regions amid the trade stand-off between China and the US.

Lee Jae-young, president of the Korean Institute for International Economic Policy, said the NSP aims to raise South Korea’s cooperation and diplomatic relations with ASEAN countries and India on par with those with the US, China, Japan and Russia.

Notably, in its economic relations with ASEAN – a focus of the policy, Vietnam plays a crucial role, accounting for more than half of cooperation in almost all fields such as trade, investment, official development assistance and people-to-people exchange.

According to Prof. Park Bun-soon from Korea University, there are many areas in which South Korea and Vietnam can further cooperate, including developing high-tech industries, Vietnam’s restructuring of state-owned enterprises, trade and investment. “Korean investment will continue to flow into Vietnam in the future,” he said.

Japan, US inflows

In similar moves, Japan and the US are also promoting their new investment strategies into Vietnam. The strategies focus on advanced technologies of Industry 4.0 in alignment with Vietnam’s latest move to prioritize hi-tech and new technologies in its foreign direct investment attraction by 2030, to stimulate inclusive socio-economic development. The US government’s recent announcement of the US-ASEAN Smart Cities Partnership, which aims to offer opportunities for US tech companies to develop key urban digital infrastructure in one of the world’s fastest-growing markets.

Industry insiders said that the US-ASEAN Smart Cities Partnership signals recognition of the importance of Southeast Asia amid the trade war with China. In absence of the US’s participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the partnership represents a significant opportunity for the US to bolster its presence and engagement in the region, and will allow the country to participate in setting information and communications technology norms and standards in Southeast Asia, including Vietnam.

The Japan External Trade Organization is piloting 18 projects in the ASEAN, including in Vietnam. (Photo: Vietnam Biz)

Regarding Japanese investments, in a way to promote transnational trade co-operation and to ensure the market for Japanese enterprises, the Japan External Trade Organization is piloting 18 projects in the ASEAN, including in Vietnam, focusing on digital technology, healthcare, the Internet of Things (IoT) and services through ‘the Pilot Project for Nurturing New Industries between ASEAN and Japan’.

According to Tomofumi Abe, director of projects at JETRO, these ventures can potentially be extended to Vietnam because of similarities in manufacturing and society, along with other factors.

Smart logistics, healthcare, and other services related to manufacturing are indeed not new sectors to Japanese firms, he said, adding now they utilize IoT and hi-tech to increase the quality and efficiency of their products.

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