South Korea’s outbound investment experienced a downward trend but its outward direct investments (ODI) in Vietnam was on the rise during the first quarter of 2024, making the Southeast Asian country a favorite destination for overseas investment by South Korean firms.

Since both nations established their diplomatic ties three decades ago, South Korea’s ODI in Vietnam has enjoyed steady growth, turning South Korea into one of the top countries in ODI projects in Vietnam.

South Korea’s outbound foreign direct investment in the first quarter of 2024 reached US$15.09 billion, marking a 14.6-percent decline versus the year-ago figure of $17.6 billion, according to statistics released on June 21 by the country’s Ministry of Economy and Finance.

The ministry attributed the slowdown to several factors, including persistently high interest rates and geopolitical risks in the Middle East, which have dampened investor sentiment.

During the January-March period, South Korean firms invested $670 million in Vietnam, representing a 47.4-percent year-on-year increase.

Official data from Vietnam showed that the Southeast Asian country granted licenses to 118 projects by South Korean investors, with total pledged capital of $856 million during the first four months of the year, leading to South Korea ranking third among the 150 countries and territories pouring investment into Vietnam.

South Korean firms’ opting for Vietnam as one of their top investment destinations amid a global economic slowdown is also evident in a survey conducted by Korea International Trade Association (KITA) in the third quarter of 2023.

Prior to the launch of the survey, South Korea’s President Yoon Suk Yeol had led a delegation of over 200 South Korean firms to pay an official visit to Vietnam from June 22 to 24.

According to the survey, which highlighted foreign business demand for 906 conglomerates and companies, the U.S. placed first among the most important investment destinations for South Korean companies with 26.6 percent, followed by China 15.1 percent, Japan 10.8 percent, and Vietnam 7.4 percent.

However, as for the choice of countries as important future business destinations, the U.S. took first place with 22.9 percent, followed by Vietnam with 8.7 percent.

Hong Sun, chairman of the Korean Chamber of Commerce and Industry in Vietnam, told Tuoi Tre (Youth) newspaper that South Korea’s ODI in Vietnam last year was lower than in other countries due to several issues.

The ODI in Vietnam bounced back in the first quarter of 2024, proving that this Southeast Asian nation remains an important partner of South Korea, as plenty of South Korean firms are expanding their business in Vietnam, Hong said.

He believed that investment activities involving Vietnamese and South Korean businesses would further advance in the years to come.

Vietnamese Prime Minister Pham Minh Chinh's ongoing trip to South Korea is joined by the leaders of seven Vietnamese provinces who will take part in separate events with major South Korean firms.

Since Vietnam and South Korea elevated their bilateral ties to a comprehensive strategic partnership in December 2022, more than 80 delegations of local officials of both countries have visited each other and explored cooperation opportunities.

Besides, there is at least one South Korean firm doing business in every Vietnamese locale.

Luong Van Nghiep, deputy director of the Planning and Investment Department in Bac Giang Province, northern Vietnam, told Tuoi Tre that the province has attracted investment from South Korean companies in 365 projects, with a total pledged capital of some $2.7 billion, mostly in the electrical and electronics sector.

Among the 30 countries and regions having investment in Bac Giang, South Korea ranks first by the number of projects and second by investment value, Nghiep added.

Bac Giang is projected to become a manufacturing hub in the northern mountainous region of Vietnam of high-quality semiconductors, ancillary industries, mechanics, and electrical and electronic products, Nghiep added, expressing his hope that PM Chinh's business trip would pave the way for a new flow of South Korean investments into the province.

Shortly after his arrival in South Korea on Sunday, PM Chinh visited diplomats and staff at the Vietnamese Embassy and representatives of the Vietnamese community in the country.

During his stay in South Korea, PM Chinh will participate in over 30 activities, according to Permanent Deputy Foreign Minister Nguyen Minh Vu.

The Vietnamese government leader will have important meetings with senior South Korean leaders, and attend the Korea-Vietnam Business Forum, as well as other forums on tourism, culture, and labor.

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