The Vietnam – Republic of Korea Free Trade Agreement (VKFTA) signed on May 5 reflects a high level of commitment from both sides and is set to both challenge and benefit the Vietnamese economy in the future.

In a recent interview granted to the Vietnam News Agency, the head of the Ministry of Industry and Trade’s Trade Promotion Agency, Bui Huy Son, said Vietnam will see an unprecedented opportunity to sell strong products to the Republic of Korea (RoK), such as farm produce, seafood, fruits, garments, footwear, electronics and wooden furniture. These will enjoy a zero percent tariff when import fees used to stand at 200-400 percent.

Vietnam can also now afford to import raw materials for domestic production and consumption, and export to a third country, including those used in garments, footwear, plastics and automobiles.

A wave of Korean capital will flow into Vietnam, bringing with it technological advances and standard management skills to the country.

The RoK - the largest investor in Vietnam so far with 83.1 billion USD committed to nearly 4.300 projects - has become the most developed nation in the Organisation for Economic Cooperation and Development (OECD).

At socio-political and diplomatic levels, it is expected that labour-intensive sectors in low-and middle income groups, including garments, footwear and agro-fisheries, will reap the most benefits from the FTA.

Asked about what challenges the FTA will pose for Vietnam, Son said the State agencies must fine-tune legal regulations in line with international standards while improving personnel capacity.

For the business community, the greatest challenge is rising competition once Vietnamese and Korean firms penetrate each other’s markets, offering consumers a myriad of choices at increasingly lower costs.

To facilitate Vietnamese exports to the RoK, Son said there are various trade fairs held annually in the country, such as the Seoul Food Industry Fair, where Vietnamese exhibitors are able to meet consumers and new partners.

The agency also holds working trips for hundreds of Korean importers to Vietnam to seek ventures. Its other activities also help improve the competitiveness of Vietnamese businesses via information sharing, support in market analysis, product design and development.

The ministry is also supporting businesses by launching large-scale electricity projects, bringing domestic products to rural areas and by providing e-commerce training.-VNA