By Lee Min-hyung
Korea has regained its status as the biggest foreign investor in Vietnam in 2019, surpassing Japan which clinched the spot for the past two years, according to data.
Data, released by Vietnam's Ministry of Planning and Investment (MPI), showed that Korea has invested $7.92 billion (9.2 trillion won) in the Southeast Asian country from the beginning of this year to Dec. 20.
The figure is equal to 20.8 percent of the total foreign investment in the country this year. Hong Kong followed the list by making investment worth $7.87 billion in Vietnam during the same period, data showed.
Of note is that Japan was ranked in fourth in the figure, a drop of three notches from the previous year. In 2017, the country invested $9.1 billion for the Vietnamese economy.
Korea was the largest foreign investor in Vietnam for three years from 2014 before Japan taking the spot in 2017.
Vietnam's Foreign Investment Agency under the MPI also said the country attracted a total of $38 billion of foreign direct investment during the same period.
More than 64 percent of the foreign capital in Vietnam was used for processing and manufacturing sectors, according to data. By region, Hanoi topped the list in attracting most foreign capital of $845 million.
"No one can refute that Vietnam is one of the world's most attractive markets with huge growth potential," an industry source said. "This is because the country provides cheap labor costs, and the Vietnamese government offers a very corporate-friendly business environment for foreign companies by providing massive tax benefits."
Samsung Electronics and LG Electronics, the nation's top-tier electronics products manufacturers, are also running their factories in Vietnam. They also consider expanding their manufacturing facilities there by relocating ones from Korea and other countries.
For instance, LG Electronics relocated production lines for smartphones from Pyeongtaek, Gyeonggi Province, to Vietnam in 2018, as part of its efforts to reduce manufacturing costs and enhance profitability.
"Vietnam's labor cost is almost one-fifth of that in Korea," said the source. "China used to be the most attractive manufacturing spot in the past, but in recent years, Vietnam began to emerge as the de facto 'manufacturing hub' particularly for global hardware players, such as Samsung and LG."
Aside from the hardware sector, more and more Korean financial firms are seeking more business opportunities in the promising Southeast Asian market.
Local lenders and financial holding companies, such as Shinhan and KB, are also on track to rapidly expand their footholds there, in their bid to tackle saturation in the local financial market.