Last week, Lee Chang Keun, honour chair of Korean Chamber for Commerce and Industry in HCM City (Kocham), said that among some 1,500 Korean businesses operating in Vietnam, nearly 500 businesses are meeting serious issues in business and 100 out of this figure cannot survive. Among the remaining 1,000 businesses, some 200 businesses are supposedly operating normally and insignificantly impacted by the crisis.

Businesses involved in commercial shops, recreation, electricity, electronics sectors are least impacted while businesses of apparel, bag sectors which account for a large portion of total Korean businesses in Vietnam are experiencing the most difficult period.

Korea is one of the top investors in Vietnam and for capital disbursement Korea is also ranked in a leading position. However, Lee Chang Keun said that position may slip this year.

Lee, who is also the CEO of Lock&Lock Vina, a Korean-plastic-manufacturing company with capital of $20 million, explained that some 20 percent of Korean businesses own capital of from $10 million to billions of US dollars and the rest 80 percent have several millions of US dollars. Those small businesses mainly operate in apparel, bag sectors, hence, they are significantly impacted by the economic downturn. He added that Posco and Kumho, two biggest investors of Korea in Vietnam, are cutting some projects in Vietnam because of the global economic recession.

Meanwhile, Dhananjay Kumar, chair of Indian Business Chamber in Vietnam (Incham), said that in two recent years, Indian investment into Vietnam has highly increased due to two big projects of Tata and Essa.

Kumar said that it is rumoured that Essa is planning to stop or scale down a multi billion-US dollar steel project in Vietnam. Additionally, some other Indian businesses are considering cutting future business plans in Vietnam because of failing to borrow bank loans.

Patrick Downey, vice chair of Australian Chamber for Commerce and Industry (Auscham)-HCM City branch, said that "there is no need to say, this is the most difficult period of steel businesses." Australia is now having two big businesses investing steel projects in Vietnam, BlueScope Steel in Binh Duong province and Austeel in Hai Phong City.

Nevertheless, Downey, who has resided in Vietnam for 19 years, said that such manufacturing sectors as apparel, leather shoe, fabric are suffering significant effects from the economic crisis in Vietnam while among over 100 Australian businesses, most operate in banking, legal, mining sectors and the minority runs in the manufacturing and processing sectors.

Australian businesses said that they are still fairly busy and still believe in the future. In addition, Downey added that education is one of the most successful investment sector of Australia in Vietnam with many institutes, schools and centres.

Patrick Wolfe, managing director of Canadian Chamber for Commerce and Industry (Cancham), said that education investment of Canada in Vietnam has also been developing strongly. The Canadian Education Centre (CEC) has been established for years with the aim of supporting for education of Vietnam that has a relatively young population structure, said Patrick Wolfe.

Another issue arisen from the crisis is that the inflow of foreign investment into Vietnam is seemingly on downtrend. Lee Chang Keun said the number of Korean businesses in Vietnam is reducing. In 2008, the number of new Korean investors into Vietnam was 200. However, this year, only some 50 cases study investment into Vietnam.

Lee and representatives from foreign business associations said that Vietnam is least impacted from the financial crisis compared to other regional countries. Thus, foreign businesses still believe in this potential market and will return in the upcoming time.

Saigon Economic Times - May 5, 2009