Korean firms' investment in Vietnam tumbles in Q1

LG Electronics plant in Haiphong, northern Vietnam [YONHAP]

Korean companies' investment in Vietnam plunged more than 70 percent in the first quarter of this year amid tougher local regulations and a global economic slump, data showed Monday.

Korean firms' investments in the Southeast Asian country totaled $474 million in the between January and March, down 70.4 percent from a year earlier, according to the data from Vietnam's Ministry of Planning and Investment.

The number of Korean investment projects also sank 16.9 percent on year to 344 in the three-month period.

Experts said the tumble came amid Vietnam's stricter rules concerning labor permits and approval of firefighting facilities.

Also responsible were falling sales resulting from the global economic slowdown, the rise of the Indian market and financing difficulties due to high interest rates, they added.

"Vietnam's tougher regulations on work visas and firefighting have resulted in increased uncertainty over Korean firms' business and investments here, necessitating the need for urgent countermeasures," said Kim Hyung-mo, chief of the Korea Chamber of Commerce and Industry's office in Vietnam.

Korean firms are estimated to account for up to 35 percent of Vietnam's exports, with Samsung Electronics and other electronics firms contributing about 25 percent.

The data also showed overall foreign investment in Vietnam plunging 38.3 percent on-year to some $5.4 billion in the first quarter, nearly half the level for the first quarter of 2019 before the spread of Covid-19.

Foreign firms' total investment in Vietnam's manufacturing sector came to $3.98 billion in the first quarter, down about 25 percent from a year earlier.

Japan's investment in Vietnam nose-dived 46 percent on year to $319 million, with investment by Chinese firms dipping 38.2 percent to $552 million.

Yonhap