South Korean firms are increasing their efforts to solidify their footholds in Vietnam as the populous Southeast Asian region has emerged as a key investment destination, industry sources said Monday.

Vietnam is one of the most attractive places for investment, as it is pushing ahead with rapid economic growth, attracting overseas investors with favorable business conditions such as cheaper labor costs and tax benefits, they said.

According to data compiled by the Korea Chamber of Commerce and Industries, South Korean companies have invested a total of US$23.4 billion in 2,823 projects.

Kumho Asiana Group is at the forefront, having invested a total of $600 million and employed 8,000 locals in the Southeast Asian country. Its affiliate Kumho Tire Co. built a tire plant in 2008 in Vietnam, and Asiana Airlines has operated flights between Incheon and Ho Chi Minh City since 1993.

Park Sam-koo, chairman of the group, met with Vietnamese President Truong Tan Sang last week in Seoul and discussed ways to enhance business cooperation in various fields.

Hanwha Group has also put more emphasis on Vietnam. Its life insurer, Korea Life Insurance Co., entered the Vietnamese insurance market in 2009, creating jobs for 5,100 people. The company said it is targeting securing a market share of 5 percent by 2015.

“Vietnam is a strategic point for Korean companies to tap into Southeast Asian countries,” said an official from Hanwha Group.

“Vietnam will help us expand our solar energy projects, natural resources development projects and life insurance business to the entire region.”

Retailers are also moving fast to expand their presence in the Southeast Asian country.

Shinsegae Group is considering opening the first E-Mart store in Hanoi by the end of next year, while Lotte Mart is set to boost its investment in Vietnam following recent regulatory approval to increase capital for its joint venture by $50 million.

“Vietnam wants to attract investment to prop up economic growth,” said an official from the KCCI’s Vietnamese office.

“The Vietnam government is aiming to double the economy by 2020, focusing more on high value-added industries such as information technology business.” 

(Yonhap News)