Vietnam – a potential destination for South Korean businesses
Vietnam – a potential destination for South Korean businesses
  • Choe Nam-suk
  • 승인 2018.10.05 12:24
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Achievements of 26 years of diplomatic relations
President Moon Jae-in (left) and Vietnamese President Tran Dai Quang pose for a photo ahead of the Korea-Vietnam summit in Da Nang, Vietnam, on Nov. 11.
President Moon Jae-in (left) and Vietnamese President Tran Dai Quang pose for a photo ahead of the Korea-Vietnam summit in Da Nang, Vietnam, on Nov. 11.

Since the establishment of diplomatic relations on 22 December 1992, Vietnam and South Korea have rapidly expanded to become "Comprehensive Partnership in 21st Century" in 2001 and then "Comprehensive Partnership" in 2009. This has brought great achievements in all fields including politics, economics, security - defense, culture and society.   

South Korea highly appreciates the central role of Vietnam in ASEAN and attaches importance to relations with Vietnam. The two countries have regularly maintained senior visits, including the official visit to Vietnam of South Korean President Moon Jae-in in March 2018, in which leaders of the two countries committed and proposed measures to promote bilateral relations to a new level and deep development in the fields. The South Korean President also affirmed that Vietnam is the focus of South Korea's "New South Policy" to promote relations with ASEAN. In 2017, the two countries also exchanged senior delegations such as delegation of Vice Chairman of National Assembly Uong Chu Luu (29 June - 1 July), delegation of Permanent Deputy Prime Minister Truong Hoa Binh (18-23 November), delegation of Deputy Prime Minister-Foreign Minister of Vietnam Pham Binh Minh (19-21 December) visiting South Korea; for South Korea, there was delegation of Chairman of the National Assembly of South Korea Chung Sye-kyung visiting Vietnam (24-26 April). 

The good development of diplomatic relations, political credibility is an important foundation for promoting economic cooperation between the two countries. In 1992, trade turnover of the two countries were only 0.5 billion USD, then they were 58.5 billion USD in 2017, increasing 117 times. Currently, Vietnam is South Korea's third largest trading partner after China and the United States. In contrast, South Korea is the second largest trading partner of Vietnam. Total trade turnover of the two countries in 2017 reached over 60 billion USD. According to the Korean International Trade Association, in the first six months of 2018, the total trade turnover of Vietnam – South Korea reached 32.936 billion USD, in which South Korea exporting to Vietnam reached 23.546 billion USD (increased 1.1%), importing from Vietnam reached 9.390 billion USD (increased 29.2%). 

President of the Federation of South Korean Industries Huh Chang-soo said "By 2020, trade turnover of the two countries can reach 100 billion USD, which have been committed by the leaders of the two countries." In terms of foreign direct investment (FDI), South Korea is the largest investor in a total of 125 countries and territories investing in Vietnam, with about 5,500 projects, total cumulative registered capital until the end of August 2018 reached 61.08 billion USD. Vietnam - South Korea investment relation is a relation of mutual benefits, which the capital, technology and knowledge of South Korean enterprises are combined with the abundant and skilled labor force of Vietnam. Currently, most major South Korean corporations such as Samsung, LG, Lotte, Posco and CJ have invested in Vietnam and expanded their investment not only in low value fields such as garment, clothing but also in fields of high technology and infrastructure projects in Vietnam. 

In addition to the economic growth, exchanges and cooperation on culture, education, tourism between the two countries have also been strengthened. There are about 150,000 South Koreans living and working in Vietnam and about 170,000 Vietnamese in South Korea, in which more than 60,000 people are Vietnamese brides married to South Koreans. South Korean-Vietnamese multicultural families have been and will be the "public diplomatic messengers" to promote the "alliance" relations between the two countries. In addition, cooperation in the field of training is getting more and more developing. In recent years, the number of Vietnamese students learning South Korean at university or higher has increased rapidly. There are more than 20,000 Vietnamese students in South Korea. In terms of tourism, Vietnam is the most popular destination for South Koreans in South East Asia in 2017 when about 2.5 million South Koreans have visited and stayed in Vietnam. The number of Vietnamese tourists to South Korea increased by more than 70%, equivalent to over 300,000 turns.   
Good development prospects for Vietnam-South Korea relations.   

In the future, Vietnam- South Korea relations is expected to continue to get more achievements. Located in the heart of the ASEAN region, Vietnam has a stable political environment, a culture that is very similar to South Korea and a strong economic growth, which becomes an attractive destination, potential market for South Korean investors, enterprises. Vietnam's GDP growth rate in the past 10 years has always been over 6%, the inflation rate is well controlled under 5%, the foreign exchange rate is stable, no fluctuation, abnormality affecting to the economy. Population rank of Vietnam is 14th in the world with nearly 100 million people, 60% of population is  under 35 years old - this is a plentiful labor force source, low cost for the market. 

Vietnam has also expanded its relations with other countries in the region and in the world through bilateral and multilateral cooperation mechanism such as the signing of 16 Free Trade Agreements (FTAs) with many countries including: South Korea, the European Union (EU); Become a full member of the World Trade Organization (WTO); the ASEAN Economic Community (AEC), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). In addition, the Government of Vietnam is actively proposing policies that help to create a favorable business environment and attract foreign investment, such as infrastructure improvements and state enterprise equitization promotion, liberalization and business equality intensification. 

Specifically, the state still only monopolizes trade activities in 20 fileds; over 96% of administrative procedures have been simplified; One-door mechanism for export origin certificate of goods in ASEAN with four countries Indonesia, Malaysia, Thailand and Singapore is applied, etc. It can be said that Vietnam is a potential market and an attractive destination for South Korean investors. In contrast, with the strength of capital and advanced technology of the 4.0 era, South Korea will support Vietnam to expand Vietnam’s existing potential, promote economic development and bring benefits in many fields for two countries.   

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