VN-RoK trade relations flourish
VN-RoK trade relations flourish
A shift that Viet Nam welcomes as evidence of its growing economic stature.
Speaking at the Viet Nam-Korea Economic Forum in late April, Le Quang Manh, deputy minister of planning and investment, affirmed the increasing value of the Viet Nam-Korea strategic partnership.
RoK is currently Viet Nam’s largest foreign direct investment partner with total registered capital of $59 billion, as well as the country’s second-largest trading partner and second-largest export market after China.
According to Kwak Young Kil, chairman of the Korea-Vietnam Culture Economic Association (KOVEKA), Viet Nam has become one of RoK’s most important trading partners, and currently plays a significant role in President Moon Jae-In’s new policy to support stronger exchanges and cooperation with ASEAN members.
Kwak noted that after 25 years of diplomatic relations, with strong growth trends in recent years, trade turnover between the two countries had reached $63 billion in 2017. Bilateral trade is expected to reach $100 billion by 2020, equivalent to an annual increase of 18 per cent over the next two years.
Korea has overtaken Japan and Singapore as Viet Nam’s biggest investor in new fields such as electronics and manufacturing. Prominent FDI firms include Samsung Electronics, LG Electronics, Doosan Heavy Industries & Construction, SK Energy and Hyundai Heavy Industries and the Korea Electric Power Corporation.
Ban Won-ik, chairman of the Association of High Potential Enterprises of Korea (AHPEK), said that since 2016, the number of investment projects and amount of capital from RoK enterprises in China has dropped sharply, as Korean companies are turning to invest in Viet Nam.
He attributed the strong investment trend to the Government of Viet Nam’s policies, including reform of administrative procedures and tariff preferences, coupled with the privatisation of State-owned enterprises and opportunities for further business expansion through mergers and acquisitions. .
In early April, Lee Hyuk, South Korean ambassador to Viet Nam, spoke with Vu Tien Loc, president of the Vietnam Chamber of Commerce and Industry (VCCI), on the strategic partnership’s impressive development in all areas, especially in trade, FDI and official development aid (ODA).
According to the Korea Trade and Investment Promotion Agency (Kotra), South Korean enterprises investing in Viet Nam started mainly with low-capital outsourcing projects in light industries for export purposes. Now, however, up to 73 per cent have moved on to serving local demand in Viet Nam’s key economic sectors such as electronics, energy, automobile, garment and construction.
As of 2017, RoK’s total investment in Viet Nam reached $7.62 billion, accounting for 27 per cent of the latter’s FDI capital. RoK is also its second largest ODA provider, after Japan.
The country’s open export segment policy, multiple signed trade agreements, low-cost labour force and incentivising policies for FDI firms are chief factors spur South Korean enterprises to choose Viet Nam.
In terms of tourism, the number of South Korean tourists to Viet Nam in 2017 has increased by 50 per cent, making Viet Nam their most visited destination in southeast Asia.
The RoK is home to nearly 150,000 currently living, studying and working Vietnamese, while Viet Nam hosts more than 140,000 South Koreans.
