Historic upgrade in ties with South Korea

During bilateral talks between Vietnam’s State President Nguyen Xuan Phuc and South Korean counterpart Yoon Suk-yeol last week, both countries released a joint statement on establishing a comprehensive strategic partnership. The nations vowed to further cement bilateral cooperation in all fields, with one focus laid on “expanding and sharpening economic, trade, and investment cooperation and development cooperation”.

State President Nguyen Xuan Phuc (third from left) witnessed the inking of bilateral cooperation deals, photo:VNA

“The two countries agree to increase the bilateral trade turnover in a balanced manner, and strive to raise the 2-way trade turnover to $100 billion in 2023, and $150 billion by 2030,” read the statement.

To reach the new trade goal, both sides agreed to “contribute to expanding economic and free trade connectivity based via removing import regulations and strengthening cooperation in the tariff sector including the e-exchange of certificates of origin based on the two nations’ agreement on mutual customs support in order to effectively implement bilateral and multilateral economic cooperation mechanisms such as the Vietnam-Korea Free Trade Agreement, the Asean-Korea Free Trade Agreement, and the Regional Comprehensive Economic Partnership.”

Especially, both sides agree to comprehensively boost cooperation in trade, investment, and development cooperation, and technological transfer. South Korea will create more favourable conditions for Vietnam to increase its exports to its market, and support domestic enterprises to participate deeper in South Korean supply chains.

Meanwhile, Vietnam will make it more favourable for companies to implement investments and expansions in many sectors such as electronics, infrastructure development, and construction of intensive high technological complexes, green industrial parks, and smart urban areas.

The joint statement said that both countries will intensify investment cooperation via sharing of information and experience in formulating mechanisms and policies on boosting startup development and innovation.

“South Korea reaffirms that the financial and banking sector is a very necessary for the comprehensive development of the economy, and proposes that Vietnam facilitate its financial organisations in the country, thereby helping the expansion of our companies there,” the statement continued. “The Vietnamese has noted and will actively consider this issue.”

Last week saw ministries, agencies, and enterprises of both countries sign 24 cooperation documents including many involving investment worth total $15 billion.

According to Vietnam’s Ministry of Planning and Investment (MPI), total accumulative registered capital from South Korea as of November 20 hit $80.8 billion, making the Northeast Asian economy the largest foreign investor here, followed by Singapore at $70.75 billion and Japan at $68.77 billion.

“South Korea remains the biggest foreign investor with new moves, expansions of operational projects, and stake acquisitions and capital contributions in the first 10 months of 2022 – accounting for 20.7 per cent of new projects, 33.2 per cent of projects with newly added capital, and 34.1 per cent of stake acquisitions and capital contributions,” said the MPI’s Foreign Investment Agency.

The largest South Korean investor in Vietnam is Samsung, which pumped about $18.2 billion in the Southeast Asian country by late last year. Samsung Electronics vice chairman and CEO Han Jong-hee told President Phuc last week that Samsung will increase its investment in Vietnam to $20 billion in the coming time. “Samsung has clear goals to implement projects in Vietnam effectively. We want to invest in developing new, young human resources, and promote research in AI and big data,” Jong-hee said.

Vice chairman and CEO of LG Corporation Kwon Bong-seok also told the Vietnamese leader last week that LG will invest an additional $4 billion in Vietnam and plans to make the nation its production hub for smartphone camera products. LG has invested $5.3 billion in multiple fields, including cameras, electronics, household appliances, and auto component production. Many South Korean companies including Hyosung, Kyobo Life Insurance, GS Engineering & Construction, Lotte, Amore Pacific, and Dongwon also want to continue increasing their funding in Vietnam. In early October, LS Electric announced it would increase its production capacity with a new factory in the northern province of Bac Ninh. It expects this new move to create $45 million a year.

According to the General Department of Vietnam Customs (GDVC), total trade between Vietnam and South Korea reached $78 billion last year - including $56.1 billion worth of South Korean exports and Vietnamese exports of $21.9 billion. The figure in the first 11 months of this year sat at $80.7 billion – with Vietnamese exports and imports of $22.5 billion and $58.2 billion, respectively.

Despite Vietnam’s big trade deficit with South Korea, the GDVC said it is of little concern as almost all products imported from South Korea are materials used for domestic production in Vietnam, and not luxury items.

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