70% of Outbound Manufacturing FDI from Korea Goes to Vietnam

Vietnam has emerged as the most preferred investment destination for Korean companies.

Vietnam has emerged as the most preferred investment destination for Korean companies, a survey of outbound foreign direct investment (FDI) by Korean enterprises showed on Dec. 19.

According to the report, which was released by KEB Hana Bank, Vietnam ranked first in terms of the number of reported cases of foreign direct investment (FDI) and the number of new enterprises set up by Korean investors.

The report says that the total amount of outbound FDI on a report basis reached US$36.76 billion in the first half of the year, up 46.5 percent from the same period last year.

By region, Asia stood out. Korean FDI in Asia has been on the rise since 2017. The amount of FDI in Asia posted US$16.98 billion in 2018, up 27 percent from 2017 when it recorded US$13.31 billion. And it exceeded US$10 billion in the first half of this year. However, the figure for North America was less than US$8 billion in the same period.

By country, the United States attracted the most FDI of US$7.66 billion on a report basis in the first half of this year. The Cayman Islands (US$5.64 billion), China (US$3.66 billion), and Vietnam (US$1.92 billion) took high places. During the same period, Vietnam posted the largest number of reported cases of FDI and the largest number of new enterprises set up by Korean investors. It recorded a total of 1,438 investment cases. A total 433 new corporations were created in Vietnam by Korean investors, ahead of the United States (290) and China (235).

Outbound Korean FDI was concentrated in manufacturing and banking-insurance. Manufacturing FDI in the first half of this year totaled US$14.76 billion, while FDI in banking and insurance added up to US$11.7 billion. The figures were larger than those of real estate (US$3.51 billion) and mining (US$1.44 billion). Hana Institute of Finance said that demand for investment is focused on Vietnam and China where large-scale investments are being made in the manufacturing industry on a national level.

Vietnam attracted US$13.35 billion worth of manufacturing FDI from Korea on a report basis, accounting for 69.7 percent of the total. It attracted US$198 million worth of banking and insurance FDI from Korea, the second largest figure with a 10.4 percent share.

Chief researcher KoEun-ah of the Hana Institute of Finance said, “Vietnam attracted the largest amount of remittance incurred by FDI and had the biggest number of newly-built corporations,” adding “With 170,000 Koreans staying in Vietnam, both immigration and investment have sharply increased. “With rapidly growing FDIs, the concentrated investment into the industries of manufacturing and banking in Vietnam, China and the Cayman Islands could speed up FDI,” the researcher also added.

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