SME investment to gain from VAFIE, Korea Credit Guarantee Fund support

Vietnam’s Association of Foreign Invested Enterprises (VAFIE) and Korea Credit Guarantee Fund seek to jointly promote Korean SME investment in Vietnam, where giants Samsung and LG are among the leading investors.

The fund, known as KODIT and the largest of its kind in South Korea, provides financial services as well as offers letters of credit, fund management, and other services like human resource management and corporate management. Its guarantees range from $2.6 million to a maximum $8.6 million, with 0.5% - 3.0% fees based on credit grade and nature of business.

KODIT has $7.5 billion assets under its management, and has provided guarantees to almost 608,000 businesses, with its main capital source being the Korean government, Kwon Haesong, representative of KODIT in Vietnam, told a recent meeting with VAFIE leaders in Hanoi.

He added KODIT also provides green finance for environmental, social, and corporate governance (ESG) investing. The fund focuses on contributions to supporting the Korean government in its carbon neutrality goal by 2050.

VAFIE chairman Nguyen Mai suggested his association and KODIT cooperate via the fund’s provision of guarantees to Korean SMEs in investing in Vietnam.

"Korea is one of the largest investors in Vietnam today. Major Korean corporations are already present, including Samsung. SMEs make up 90% of all companies in Korea, therefore we hope to welcome more Korean SME investors to Vietnam's green growth and digital economy, in line with Vietnam's investment attraction strategy," Prof. Mai said.

Korean SMEs are expected to come to other localities in Vietnam, not just major metropolitans like Hanoi, Ho Chi Minh City, and Danang, he added. VAFIE can support investors in understanding project sizes, incentives, and investment procedures so they can get the job done smoothly.

As VAFIE has published an annual review of foreign investments in Vietnam, starting this year, Mai suggested KODIT provide its insights on Korean investors as inputs for the publication.

Haesong said he also hoped the annual review would include information on his fund and its business activities, and the meeting would kickstart cooperation between KODIT and VAFIE.

As of the end of 2021, KODIT in Vietnam had provided guarantee services to 78 Korean SMEs operating in Vietnam.