South Korean manufacturers have been shifting the focus of their overseas direct investment to Viet Nam from China thanks to tax incentives, cheaper labour and other favourable conditions, Yonhap reported on Thursday.

Viet Nam made up 17.7 per cent of South Korean manufacturing companies’ total direct overseas investment in 2017, surging sharply from 3.7 per cent in 1990, Yonhap quoted the Federation of Korean Industries as saying.

In contrast, the comparable figure for China declined to 27.6 per cent last year from 44.5 per cent in the 2000s. In particular, South Korea’s small and midsize manufacturers rushed to the Southeast Asian nation for direct investment, moving away from the world’s second-largest economy.

The report said Viet Nam’s rise as a major destination for South Korean manufacturers’ investment is attributable to changes in business climates and policies in both countries.

A different report from the Ministry of Planning and Investment’s Foreign Investment Agency showed that South Korean investors pumped more than US$6.5 billion into Viet Nam over the past 10 months, accounting for 23.4 per cent of the nation’s total foreign direct investment (FDI).

As of October 2018, South Korea retained its crown as Viet Nam’s leading source of FDI with more than 7,300 valid projects, worth a combined $62.1 billion. — VNS