{"id":2203811,"date":"2024-02-13T15:46:35","date_gmt":"2024-02-13T06:46:35","guid":{"rendered":"https:\/\/koreapro.org\/?p=2203811"},"modified":"2024-02-13T15:57:35","modified_gmt":"2024-02-13T06:57:35","slug":"vietnams-politics-and-bureaucracy-complicate-business-partnerships-with-korea","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2024\/02\/vietnams-politics-and-bureaucracy-complicate-business-partnerships-with-korea\/","title":{"rendered":"Vietnam\u2019s politics and bureaucracy complicate business partnerships with Korea"},"content":{"rendered":"
Since establishing diplomatic relations in 1992, South Korea has become one of Vietnam\u2019s most significant investors. It has also become a key export market for various Vietnamese goods, such as electronics and textiles, marking a vibrant trade relationship.<\/span><\/p>\n The robust presence of South Korean companies in Vietnam, such as Hyundai Motor Company, Lotte Group, LG Electronics, Samsung Electronics and SK Group, highlights this solid economic foundation. Their investments reached <\/span>$81.5 billion<\/span><\/a> across 9,666 projects by July 2023.<\/span><\/p>\n Despite global market volatility and the COVID-19 pandemic’s ramifications, the resilience of this economic partnership speaks to the strategic importance both nations hold for each other.\u00a0<\/span><\/p>\n South Korean President Yoon Suk-yeol\u2019s visit to Vietnam in June 2023, which elevated the countries to \u201cComprehensive Strategic Partners,\u201d reinforced the country\u2019s status as a key investment destination for South Korean conglomerates and small to medium enterprises (SMEs).<\/span><\/p>\n However, the landscape is fraught with challenges that require careful monitoring and adept management of risks to secure and grow market presence effectively.<\/span><\/p>\n PARALYSIS OF BUREAUCRACY & POLITICAL RISK\u00a0<\/b><\/p>\n Despite Vietnam\u2019s integration into the global economy and diminishing adherence to orthodox Communist ideology, it remains governed by the Communist Party of Vietnam, the sole legal political entity, marking the nation\u2019s political landscape as decidedly authoritarian with significant <\/span>restrictions<\/span><\/a> on civil and political rights.<\/span><\/p>\n In March 2023, Vo Van Thuong assumed the country\u2019s <\/span>presidency<\/span><\/a> through a National Assembly resolution, succeeding a predecessor who was ousted over a corruption scandal. This event underscores the pervasive issue of corruption affecting the business climate, where facilitation payments are often expected to circumvent bureaucratic delays.<\/span><\/p>\n Under Thuong\u2019s leadership, with the <\/span>support<\/span><\/a> of General Secretary Nguyen Phu Trong, Vietnam has embarked on an anti-corruption campaign, resulting in the incarceration of numerous high-profile officials.\u00a0<\/span><\/p>\n However, this crackdown has inadvertently slowed the administrative process, exacerbating bureaucratic inertia and hindering economic activities. Officials, wary of future investigations, are increasingly hesitant to approve new projects, fearing accusations of corruption could lead to severe consequences.<\/span><\/p>\n While few foreign companies have been affected to date, the anti-corruption drive exposes them to indirect impacts and the risks of being ensnared in broader investigations. One significant challenge for foreign businesses, including those from South Korea, is navigating Vietnam\u2019s complex bureaucratic landscape.<\/span><\/p>\n Despite governmental promises to streamline administrative processes and reduce oversight, the practical implementation of these <\/span>reforms<\/span><\/a> remains a significant hurdle.<\/span><\/p>\n South Korean businesses operating in Vietnam must be prepared to navigate challenges related to bribery and corruption, emphasizing the importance of conducting thorough due diligence in all business dealings. A zero-tolerance policy toward corruption, coupled with comprehensive workforce training to identify and resist corrupt practices, is essential.<\/span><\/p>\n Additionally, the support network provided by organizations such as the Vietnam International Arbitration Centre and the <\/span>Korea Chamber of Business in Vietnam<\/span><\/a> offers valuable legal and advisory resources.<\/span><\/p>\n