South Korean companies — including Samsung Electronics, Vietnam’s largest foreign investor — are expressing concern over the Vietnamese government’s proposed reforms to high-tech sector incentives, warning that the changes could increase costs and discourage new investment.
The issue arises as Vietnam faces growing trade pressure from the U.S., its biggest export market. Washington has already imposed a 20% duty on Vietnamese imports since August and is considering up to 40% tariffs on goods with high foreign component content — a direct risk for electronics producers heavily reliant on Korean supply chains.
🔹 Why It Matters
South Korea remains one of Vietnam’s most important economic partners, with $92 billion in total investment — nearly one-fifth of Vietnam’s GDP.
Samsung alone accounts for over 10% of Vietnam’s total exports and manufactures 60% of its global smartphones in the country.
Under the proposed reform, existing tax, duty, and land incentives for high-tech companies could be scaled back or replaced entirely.
“This could have adverse implications for Vietnam’s long-term development goals, including investment expansion, technology transfer, and human resource development,”
said Ko Tae Yeon, Head of the Korean Chamber of Commerce (Kocham) in Vietnam.
🔹 Policy Shift Context
The new High-Tech Law revision, currently debated in the Vietnamese National Assembly, is expected to pass in December.
It follows the introduction of a 15% Global Minimum Tax in 2024 — part of an OECD-led initiative — which already eroded the 5% effective tax rate previously enjoyed by major multinationals like Samsung.
While Hanoi has pledged compensation mechanisms for affected firms, access remains uncertain.
Korean officials said companies are worried about heavier tax burdens but have not yet threatened to halt investments.
🔹 Trade and Supply Chain Risks
Beyond tax reforms, Korean investors are increasingly anxious about U.S.–Vietnam trade tensions. Kocham urged both governments to establish clear and fair transshipment rules, warning that unclear U.S. tariff criteria could destabilize cross-border manufacturing flows.
“Investors need a stable and predictable environment,” Kocham emphasized in a public statement.
Despite the unease, Korean FDI pledges in Vietnam rose 15% to $3.7 billion in the first ten months of 2025 — showing continued confidence, though tempered by policy uncertainty.
💡 Takeaway:
Vietnam’s policy recalibration reflects its ambition to strengthen domestic champions and align with global tax frameworks. But without clear safeguards for high-tech investors, it risks testing the resilience of one of Asia’s most successful foreign investment relationships.