Vietnam willing to open financial market further: embassy

Ambassador of Vietnam to Korea Nguyen Vu Tung, left, Head of Investment at the Embassy of Vietnam in Korea Pham Viet Tuan, center, and First Secretary at the Embassy of Vietnam in Korea Pham Khac Tuyen attend The Korea Times Global Business Club forum at the Korea Press Center in Seoul, Monday. Korea Times photo by Choi Won-suk

By Lee Kyung-min

Vietnam is willing to deregulate its financial market further to attract more investments from Korea and other countries to advance the Southeast Asian country's financial service industry to match its rapidly-growing economy, senior officials at the Embassy of Vietnam in Korea said Monday.

The Vietnamese government's directives will enable an increasing number of Korean banks and securities companies to enter and expand their presence there, supported by eased limits on foreign equity investment caps and borrowing, they added.

Korea, whose financial service industry achieved rapid growth over the past several decades, could serve as a model.

"The Vietnamese government is willing to dramatically ease regulations for Korean financial services providers," Pham Viet Tuan, head of investment at the Embassy of Vietnam in Korea said during The Korea Times Global Business Club forum at the Korea Press Center in Seoul.

Leading Korean banks and brokerages entered Vietnam about 15 years ago and have since sought growth through mergers and acquisitions, joint ventures set up with local counterparts and securing greater shares through equity investments in firms there.

"Many Korean financial market players have made investments ― direct or indirect ― in Vietnam," he said. "We are not able to fully open up our financial markets due to obvious limitations as a developing country. But we have outlined what many Korean firms consider foreign-friendly measures and will continue to establish rules that can foster the growth of our country's financial system."

Audience members listen to a presentation during The Korea Times Global Business Club forum at the Korea Press Center in Seoul, Monday. Korea Times photo by Choi Won-suk

Pham Khac Tuyen, first secretary at the Embassy of Vietnam in Korea, said the vision aims to find new growth momentum for the Southeast Asian country's economy through future-oriented industries, such as semiconductors, secondary batteries, bio, displays and robotics businesses.

Cooperation with Korea will, the first secretary added, fortify economic security and lead to a stable supply chain, while strengthening food security and bolster cooperation in the agriculture sector.

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"Korea and Vietnam can identify joint entry into third countries and expand cooperation among small- and medium-sized enterprises (SMEs) and startups. The goals can in turn reinforce multilateral solidarity between Vietnam and Korea," he said.

From left are former Ambassador of Korea to Vietnam Lee Hyuk, Ambassador of Vietnam to Korea Nguyen Vu Tung, Head of Investment at the Embassy of Vietnam in Korea Pham Viet Tuan and First Secretary at the Embassy of Vietnam in Korea Pham Khac Tuyen at The Korea Times Global Business Club forum at the Korea Press Center in Seoul, Monday. Korea Times photo by Choi Won-suk

Korea has enjoyed a surplus for decades in trade with Vietnam. But Vietnam does not see this as a stumbling block in its relations with Korea.

"Vietnam needs to grow and increase its production capacity and the market size," he said. "Complaining about a trade surplus for Korea ― a deficit for us ― is not as important as fortifying our capabilities enough first to fully handle national industrial growth for ourselves."

Last year, Korea saw a surplus of $34.26 billion (45 trillion won) in trade with Vietnam, up more than three times compared to 2012.

According to the Embassy of Vietnam in Korea, the Southeast Asian country registered 8 percent economic growth in 2022, while its GDP per capita stood at $4,200.

Foreign direct investment (FDI) into Vietnam reached $30 billion in 2022, while its trade volume stood at $730 billion.

A member of the audience listens to a presentation given during The Korea Times Global Business Club forum at the Korea Press Center in Seoul, Monday. Korea Times photo by Choi Won-suk

But 2023 is challenging, as evidenced by 3.32 percent growth in the first three months of this year, down from 5.05 percent a year ago.

Of particular concern, according to the head of investment, was the manufacturing and construction sectors displaying a 0.4 percent contraction, compared to 6.56 percent growth a year ago.

Ho Chi Minh logged only 0.7 percent economic growth, a worrisome performance for the vibrant city.

The growth of major industrial products such as mobile phones and phone accessories, automobiles and clothes, reported a contraction of between 10.2 percent and 17.8 percent.

The investment head said Korea's FDI in Vietnam accounted for 30 percent of Korea's FDI to the member countries of the Association of Southeast Asian Nations (ASEAN), which is indicative of the robust bilateral economic ties bolstered further by Vietnam-Korea trade volume equaling Korea-ASEAN trade, he stressed. ASEAN is a political and economic union of 10 member states in Southeast Asia.

There are 200,000 Korean expatriates in Vietnam and Korea is the second-largest overseas development assistance (ODA) donor to Vietnam. Vietnam is the largest ASEAN market for Korean construction firms.