Vietnam's Reform on High-Tech Incentives Raises Concerns for Korean Investors

Vietnam's planned reform of investment incentives in the high-tech sector has alarmed South Korean companies, including Samsung. The changes could lead to higher costs and dissuade future investment. This development comes amid uncertainties surrounding trade relations with the U.S., as Vietnam faces potential hefty tariffs.

South Korean businesses, notably Samsung Electronics, are expressing apprehensions over Vietnam's proposed changes to investment incentives in the high-tech industry. Officials have warned that this could increase costs for foreign investors and deter new investments. These concerns arise amidst ongoing uncertainties in Vietnam's trade relations with its largest export market, the U.S.

Currently, a 20% duty applies to Vietnamese imports into the U.S. since August, with potential tariffs of up to 40% on electronics and goods depending on foreign components, heavily impacting Korean manufacturers in Vietnam. South Korea remains a leading investor in Vietnam, with Samsung accounting for 60% of globally sold phones produced in the country.

In a recent address to Vietnam's Prime Minister, the Korean Chamber of Commerce highlighted that the proposed changes to high-tech law could impact Vietnam's medium- and long-term development goals. Despite Hanoi's promises of compensation, companies remain concerned. Investment pledges by Korean companies did see an increase, growing 15% over the first ten months of this year.

(With inputs from agencies.)