Power shortage is a major obstacle for foreign investors.

Korean businesses believe in the prospects in Vietnam at present, but are concerned about the future when Vietnam passes its golden population period and the electricity shortage problem is not resolved soon.

Mr. Hong Sun, Chairman of the Korean Business Association in Vietnam, spoke on the sidelines of the 2024 annual Vietnam Business Forum (VBF).

Mr. Hong Sun, Chairman of the Korean Business Association in Vietnam.

How do you assess the prospects of Korean investment capital flows into Vietnam in 2024?

We believe that the global economy is recovering well and Korean businesses are confident in expanding their investments in Vietnam. However, new investment deals will be relatively limited, most Korean businesses that are capable of going abroad are already present in Vietnam. The important thing is how to retain those businesses, making them confident in continuing to expand their operations here. Therefore, Vietnam must continue to provide and create favorable conditions for foreign investors.

Vietnam is in the golden population period, the best and most beautiful population structure. But this period will not last forever, it is only limited to the next 10-15 years. Later, when people's backs are bent and the economy has not developed, if all foreign investors withdraw, leaving only domestic enterprises, it will be very dangerous for Vietnam.

Now is an important time for the future, if we do not try harder, the next 10 years will be very difficult. Many foreign enterprises in general and Korean enterprises in particular are quite worried about the future of Vietnam. In 10-15 years, we are not sure if Vietnam will be as attractive, young, dynamic and full of potential as it is now. If Vietnam does not quickly resolve the difficulties and obstacles now, it will be very difficult to continue to retain investors in the future.

To address the concerns of foreign investment enterprises in general and Korean enterprises in particular when looking to the future, in your opinion, what is the most urgent problem for Vietnam today?

The most urgent issue right now is infrastructure, especially electricity. When the Korean Ministry of Trade and Industry planned for industrial development, they planned for electricity development first. Without electricity, there is no industry. Steel production, semiconductor production, screens, batteries, etc. all use electricity, so Korea needs to ensure a huge source of electricity.

During June to July 2023, many areas in Northern Vietnam (Bac Ninh, Hai Duong, Ha Nam, Phu Tho, Vinh Phuc...) experienced power outages due to power shortages. Some industrial zones also conducted power outages with notice, with a frequency of about 1-2 times/week.

The Vietnamese government is also aware that the lack of electricity is a major obstacle to attracting foreign investment and improving the production competitiveness of Vietnamese enterprises. There have been many efforts to propose solutions, but this is a problem that is difficult to solve in the short term.

For Korean companies looking to invest in Vietnam, especially high-tech companies such as semiconductors, Vietnam’s power shortage is one of the major factors that makes them hesitate in making investment decisions. Korean companies are currently very interested in technology-intensive industries that are in line with the environmentally friendly trend such as rooftop solar power, but are still hesitant.

The stance of other global businesses in the industrial sector that the Vietnamese Government wants to attract investment is similar.

So what can Korean businesses do to support Vietnam in solving its urgent electricity problem?

As we reported to Prime Minister Pham Minh Chinh, we have invested in an LNG power port in Vietnam. In the future, if Vietnam accepts, we are ready to invest in developing nuclear power. Regarding nuclear power, we are number 1. Korea is managing, operating and exporting many nuclear power plants around the world. When Vietnam accepts to build nuclear power, we are ready to invest and cooperate with Vietnam to achieve the Net Zero goal by 2050.

In addition to the problem of power shortage, we also have to mention the delay of domestic enterprises in participating in the global supply chain, sir?

Currently, very few Vietnamese enterprises are interested in participating in the global supply chain. We have large world-class corporations such as Samsung, LG, etc., but not many Vietnamese companies participate in our supply chain, which is a pity.

Samsung entered Vietnam in 2008 and has been producing phones for 16 years. During that time, there have not been a significant number of businesses like the Korean supporting businesses joining the chain. Vietnam still does simple services like packaging and food, not high technology or important components.

We expect and are ready to create all conditions for Vietnamese enterprises to participate in the chain. If the product quality of Vietnamese and foreign enterprises is the same, we will prioritize buying from Vietnamese enterprises, but it is still very difficult to find.

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