Since diplomatic relations was established 23 years ago, Korea and Vietnam have shown remarkable growth in many fields including economy, culture, and society. Currently, over 3,000 Korean companies have moved branches and factories into Vietnam, employing over 600,000 Vietnamese. Vietnam’s Ambassador to Korea, Pham Huu Chi sat down for an interview with Korea IT Times to talk about the cooperation and exchanges of two countries.
Question) As you are well aware, Korean President Park Geun-hye and General Secretary of the Communist Party of Viet Nam had summit talk on October 2nd last year. Please let us know the major issues discussed and agreed during the summit.
There were a wide range of issues discussed at the summit. Sharing the positive review on the robust development of bilateral relationship since the establishment of diplomatic relations in 1992, President Park Geun-hye and General Secretary Nguyen Phu Trong underlined the need to comprehensively develop and further deepen the ROK-Viet Nam Strategic Cooperative Partnership established in 2009.
The leaders expressed their commitment to intensify bilateral co-operation in various fields including politics and security, national defense, trade and economy, society and culture, as well as regional and international issues. They also agreed to seek measures to further strengthen the current exchanges between the governments, legislative bodies, and political parties of both countries, and encouraged the furtherance of existing channels of consultation to strengthen political-security co-operation and mutual trust.
For economic cooperation, they reaffirmed the target of concluding negotiations for the ROK-Viet Nam Free Trade Agreement within the year 2014, and agreed to further expand and facilitate implementation of ongoing bilateral co-operation in labour, industry, agriculture, finance, and development projects as well as in large-scale infrastructure construction projects so as to effectively connect the two economies and support sustainable development in both countries.
General Secretary Nguyen Phu Trong appreciated the contribution of Korean companies to Viet Nam's economic growth and expressed the willingness of the Vietnamese government to create favourable conditions for expanding Korean business investment in Viet Nam.
In addition to the mutual commitment to strengthen the people-to-people exchanges in various areas including education, science, culture, sports and tourism, the leaders agreed redouble efforts to enhance the security and welfare of nationals residing in each other's nation. They noted in particular the importance of multicultural families as a bridge between the two peoples, and agreed on joint efforts to encourage future generations of multicultural families to play a central role in the youth exchanges between the two countries.
On this occasion, Viet Nam reaffirmed our support for the ROK's initiatives to promote dialogue, reduce tension, establish sustainable peace towards peaceful reunification on the Korean Peninsula and to promote peace and co-operation in Northeast Asia. Both leaders reaffirmed the ROK-Viet Nam Joint Statement in 2013 and called upon the DPRK to fully comply with relevant UNSC resolutions as well as its commitments under the September 19, 2005 Joint Statement of the Six-Party Talks.
The leaders also emphasized the importance of maintaining peace, stability and ensuring maritime security and safety, and freedom of navigation in the South China Sea, and recognized the need for parties concerned to resolve issues in a peaceful manner in compliance with international law, to implement the 2002 DOC, and to work towards the early adoption of the COC.
Question) Korea and Viet Nam are expecting FTA to be put into effect within this year. Please let us know your expectation on the substantial figures on increase of trade between the two countries next year.
Despite the decline in trade between Korea and the world in the first 5 months of this year, the bilateral trade between Korea and Viet Nam still increased sharply by 23%. After the bilateral FTA comes into effect, trade between Korea and Viet Nam will further increase in the coming years . In fact, there are a number of favourable conditions that support the expansion of our bilateral trade.
First, the production links between our two economies are being enhanced. Viet Nam is currently in the top 5 attractive destinations for Korean investment. Such an increasing flow of investment will certainly have an impact on the flow of trade.
Second, with a series of free trade agreements that have been concluded recently or soon to be concluded, including TPP, Viet Nam – EU, Viet Nam – Eurasian Economic Union, market access for Vietnamese products to the US, EU, Japan and Russia will be improved. This, in turn, will stimulate the trade flows of materials and production inputs between Viet Nam and Korea to manufacture goods in Viet Nam and ship them to those markets.
Third, the structures of our economies are complementary rather than directly competed against each other. Therefore, economic growth in each country will have a spill-over effect on the bilateral trade. The coming FTA between Viet Nam and Korea will add more momentum to this rising trend since the agreement will further remove unnecessary barriers to our bilateral trade and investment.
Although there are some uncertainty for the outlook of the world economy, I still expect that our bilateral trade could reach US$ 40 billion in 2016 and on the right track to the target of US$ 70 billion by 2020 set by the leaders of the two countries during the official visit of President Park Geun-hye to Viet Nam in 2013.
Question) Please tell us of your point of view on what industrial sectors would be most promising ones for Korean companies to invest further in Viet Nam
According to our industrialization-modernization strategy till 2020 when Viet Nam will fulfil its goal of basically becoming a modern-oriented industrialized nation and with a vision towards 2030, Viet Nam will encourage the development of six key industries with high value-added investment and international competitiveness. The six key industries include electronics, agricultural machinery, agro-fishery manufacturing, shipbuilding, environment and energy saving, and automobile and spare parts.
These key industries will take lead in applying high technologies (information and communication technology, bio-technology, nanotechnology, new materials, new energies…) and green technologies. Viet Nam has established several hi-tech zones to attract domestic and foreign investment such as Hoa Lac Hi-Tech Zone, Ho Chi Minh City Hi-Tech Zone, several Technological Incubators and 8 Software Parks in Ho Chi Minh City, Da Nang, Ha Noi, Hai Phong, Can Tho, Thua Thien-Hue.
By 2020, the key industries with prioritized areas will expand at least 20 percent per year and contribute 35 percent of total value of the industrial sector. Viet Nam has also attached great importance to development of environment-friendly industries, renewable and sustainable energies (solar, wind, tidal, hydropower), waste processing industry…
The participation of foreign companies in process of restructuring Viet Nam state owned enterprises (by equitization), restructuring bank (by becoming strategic partner, purchasing bad debt), purchasing transportation infrastructure such as airport, expressway, sea port and so on by the way of PPP is highly encouraged and appreciated by Viet Nam government.
Question) Please introduce successful Korean companies in Viet Nam in major industrial sectors in order to give conviction and insight to potential Korean companies to invest in Viet Nam in the year to come.
Up to June 2015 Korea has invested in Viet Nam 4,459 projects with registered investment capital of 39.159 billion USD in the first ranking of 101 countries and territories investing in Viet Nam. The average scale of Korean project is around 9 million USD, equally to 63,1% average scale of FDI projects in Viet Nam. It makes important contribution to Viet Nam economy with more than 700 thousand jobs and 25% of total export value of Viet Nam (in which import from Korea is around 15% total import value).
Now there are most of biggest Korean companies are successfully investing in Viet Nam such as Samsung with 11 billion USD in 5 factories, LG with nearly 2.5 billion USD in 3 factories, Hyosung with 2.2 billion USD, and in real estate and transportation sector such as Lotte, Kumho, Posco, GS, in entertainment with famous company name of CJ. In retails and real estate sector, Lotte Group is one of the most popular names in Viet Nam
Besides the big Korean corporations there are also more than 240 small and medium Korean companies providing semiconductors directly to Samsung, LG and other big companies like Selnix, Iljin, KMW, Ace Technology, Blue Com, Hansol, Shindon etc., indirectly such as Foseca providing foodstuff ...
Question) Please tell us of your opinion on how to strengthen further the understanding between the two peoples of both countries.
I think that the development of tourism and cultural exchanges certainly plays the first and foremost important role.
The second priority should be the effective implementation of our leaders’ agreement last year that we will redouble mutual efforts to enhance the security and welfare of nationals residing in each other's nation. The Vietnamese-Korean multicultural families in Korea as well as the Korean community in Viet Nam will be a bridge for us getting closer to one another.
Thirdly, I think that the mutual understanding could be promoted by the frequent image of one country in normal life of the other. You can see the fact that the Korean products are flooding the Vietnamese market, ranging from cars, trucks, buses, electronic products to Ginseng, shoes, cosmetic and other consumer products.
Many Korean companies have exported machineries, materials, parts, and equipment for their production bases in Viet Nam that contributing to the large trade surplus from Korean side. On the other hand, Vietnamese products have been on the Korean market more and more but they should be increased further.
I believe that in medium and long term, the two sides should find ways to gradually turn the current situation into a more balanced manner.
Last but not least, press and communication play very important role in promoting mutual understanding between our two peoples. I very much appreciate IT Time for its contribution in this regards.
