Mobile phone factory of RoK's Sumsung Group in Thai Nguyen - Illustrative image (Source: VNA)Seoul (VNA) – Manufacturers from the Republic of Korea have beenshifting the focus of their overseas direct investment to Vietnam from Chinathanks to tax benefits, cheaper labour and other favourable conditions, said a reportreleased by the Federation of Korean Industries on November 22.
According to the report, Korean manufacturing companies’overseas investment in Vietnam accounted for 17.7 percent of the total in 2017,an impressive rise compared with 3.7 percent in 1990.
Meanwhile, the figure for China reduced significantly to27.6 percent last year from 44.5 percent in the 2000s.
The RoK’s small- and medium-sized manufacturers moved awayfrom the world’s second largest economy to the Southeast Asian country fordirect investment. Their direct investment in Vietnam hit 720 million USD in2017, compared with 430 million USD for China.
The report showed that large companies’ direct investment inChina has been on the wane, but the amount was 2.7 times higher than that inVietnam last year.
The report said Vietnam's rise as a major destination for Koreanmanufacturers' investment is attributable to changes in business climates andpolicies in both countries.
In 2008, China imposed a flat 25 percent corporate tax onboth foreign-invested companies and domestic firms, including businesses insome high-tech sectors.
China has also expanded the list of products, in whichforeign investment is banned or restricted, while the country's minimum wagehas been on the steady rise.
In contrast, Vietnam has exempted foreign-invested high-techcompanies from corporate taxes for four years, while lifting the cap on foreigninvestment.
In addition, Vietnam's minimum wage has been at a level halfthat in China, serving as a magnet for foreign companies, the report said.-VNA
VNA
