VietNamNet Bridge - With a total investment of $25 billion, South Korea has surpassed Japan to become the largest investor in Vietnam.

A Korean-invested supermarket in HCM City.

According to the latest statistics from the General Statistics Office, 56 countries and territories had investment projects licensed in Vietnam in January-November 2015.

South Korea is the largest investor with $25 billion, accounting for 18.6% of total newly registered capital; followed by Malaysia with $24 billion; the UK with $12.69 billion; and Japan with $12.67 billion.

After a period of significant reduction of investment in Vietnam (down from $56 billion in 2012 to $23 billion in 2014), in 2015 Japan was outstripped by South Korea for the amount of capital invested in Vietnam.

South Korea also has a larger number of projects in Vietnam compared to Japan, with 653 projects compared to 281 projects.

The rise of the Korean wave of investment in Vietnam is thanks to the arrival of two technology giants - Samsung and LG, accompanied by many spare part suppliers with large-scale projects.

Specifically, the two projects of Samsung in Bac Ninh Province attracted more than 40 Korean spare part providers.

In May, LG also launched a $1.5 billion factory producing appliances in Trang Due Industrial Zone in Hai Phong. This plant is the largest manufacturing base of LG in Southeast Asia.

Many other big projects of Korean investors were implemented in Vietnam in 2015, not only in the fields of electronics and manufacturing but also in commerce and services.

So, what is the attraction of the Vietnamese market to Korean investors?

The reason for choosing Vietnam are the opportunities opening up from free trade area agreements that Vietnam joins.

In particular, Korean firms have awaited tariff reduction commitments, market expansion, and investment opportunities from Vietnam-Korea Free Trade Agreement (FTA).

According to Martin Tricaud, President and CEO of HSBC in South Korea, Vietnam's attractiveness as an investment destination of Korean companies is its young and skilled labor force, low labor costs and stable political environment.

The FTAs that are connecting Vietnam with 55 countries around the world with the support of the Government of Vietnam s are also appreciated by Korean investors.

"The flow of trade and investment will continue, especially with the Vietnam – South Korea FTA," said Martin Tricaud.

Nam Nguyen