Vietnam Real Estate Attracts FDI Inflows From Korea

Korea is one of the largest contributors to total foreign investment in Vietnam. In particular, the producing – manufacturing sector continued to maintain a good growth rate. However, Korean businesses are also adding real estate to their portfolios, with many new high-quality projects being carried out.

Recently, Vietnam participated in the discussion on new economic initiatives in the Asia-Pacific region. With the participation of leaders from many countries such as the US, Japan, India, and South Korea, the Indo-Pacific Economic Framework for Prosperity (IPEF) will open up many trading opportunities between Vietnam and other countries in the region.

In particular, trade activities between Vietnam and Korea are still promoted. In early 2022, the Ministry of Finance coordinated with the Korean Embassy and the Korean Chamber of Commerce and Industry in Vietnam to organize a “dialogue conference between the Ministry of Finance of Vietnam and Korean businesses on Tax – Customs administrative procedures and policies in 2022”. In particular, both countries are continuing their efforts to amend the Agreement on Avoiding Double Taxation to improve the tax administration environment.

Korea is one of Vietnam’s largest foreign investors. According to the 2022 data of the Ministry of Planning and Investment, in the past three years, Korea has always been in the top three countries with the highest amount of foreign direct investment (FDI) poured into Vietnam. In particular, in the first five months of this year, the total investment capital into Vietnam from this country was the second highest, with over $2.06 billion, up 12.6% over the same period last year.

By number of projects, Korea is the largest partner with 112 new projects accounting for 19.4% share. Moreover, this is also the country with the most adjustments, accounting for 36.7% of the total capital contribution and share purchase.

Mr. Andrew Lee, Senior Manager, Korea Business Development Division, Savills Vietnam: “Thanks to the decision to open air routes in Q1, Korean investors can now freely move to Vietnam, directly looking for investment opportunities to enter and expand in the market.”

PRODUCING – MANUFACTURING CONTINUES TO ATTRACT THE MOST OF FDI

In February this year, Thai Nguyen has just awarded the investment registration certificate to expand the project by 920 million USD to Samsung Electro – Mechanics Vietnam Co., Ltd. With this adjustment, the investment capital of Samsung Electro – Mechanics factory in Thai Nguyen has increased from 1.35 billion USD to 2.27 billion USD. This factory manufactures and assembles components and spare parts for telecommunications equipment, high-tech mobile devices, and other electrical and electronic products.

From 2017 onward, the proportion of FDI capital invested in the processing and manufacturing industry from Korea has always reached over 70%. As of November 2021, the share of this sector has recorded growth, reaching 74%.

Commenting on the trend of cash flow coming from Korea, Mr. Andrew Lee, Senior Manager, Business Development Department for the Korean market, Savills Vietnam shared: “The trend of investment along the value chain, especially is a commodity with high added value that is increasingly evident in recent years. Thanks to the advantages of the region, typical projects are mainly concentrated in the northern key economic region. On the other hand, traditional industries such as export textiles and energy continue to be prioritized in the southern industrial and economic zones.”

INVESTMENT IN REAL ESTATE IS GROWING

Besides the manufacturing sector, real estate is also attracting significant FDI capital from Korea in recent years. The proportion of investment in real estate doubled in 2018 compared to the previous year. This number is on track to increase from 2020, reaching 13% by the end of November 2021.

Assessing the market’s performance in the past time, Mr. Andrew Lee shared: “The Covid-19 pandemic has limited the commercial activities of Korean investors because they cannot directly access projects. real estate in Vietnam. However, the decision to open international flights in Q1 has created conditions for the units to move freely and work. They are actively looking for investment opportunities to enter and expand in the market. Therefore, we think that in the coming time, many real estate projects will be invested in this country.”

YSL Group is implementing an industrial land project with an area of ​​​​nearly 300 hectares in Nam Binh Xuyen, Vinh Phuc. The project is built in the direction of green development and high technology, possessing strict requirements on equipment, advanced science and technology.

Right at the beginning of 2022, Vietnam’s real estate market has welcomed many new projects. The highlight is the investment of $ 900 million by Lotte E&C to develop a smart urban area named “Lotte Eco Smart City Thu Thiem”. In addition, YSL Group is also implementing an industrial land project with an area of ​​​​nearly 300 hectares in Nam Binh Xuyen, Vinh Phuc. The project is built in the direction of green development and high technology, possessing strict requirements on equipment, advanced science and technology. In the future, Nam Binh Xuyen industrial park will attract domestic and foreign enterprises, especially Korean enterprises, to invest in Vinh Phuc.

Logistics and warehouse are two of the industrial real estate that receive the attention of many Korean businesses. In particular, the prominent trend is the development of cold storage or smart warehouse. “Vietnam is an ideal destination for businesses who want to diversify their profile and avoid depending on one country in the supply chain. Localities possessing the advantage of geographical location near the border, ports and developed transport infrastructure are attractive destinations for investment capital. Along with that, the improvement in the investment environment in Vietnam is an important motivation for Korean investors to boost capital inflows into real estate in the near future.” – Mr. Andrew said

https://vn.savills.com.vn/blog/article/207268/vietnam-viet/dong-fdi-han-quoc-chay-vao-bat-dong-san-viet-nam-tang-cao.