Heo Yoon, a professor from Sogang University Graduate School of International Studies and President of the Korean Association of Trade and Industry Studies, addresses the seminar on November 16. (Photo: VNA)Hanoi (VNS/VNA) - Over the past 25 years, theeconomic ties between Vietnam and the Republic of Korea have flourished, butthe trade imbalance between the two countries has reached an alarming level.
Bark Tae-ho, former RoK Minister of Trade, spoke on the topicduring a seminar in Hanoi on November 16.
The seminar – themed “Future prospects for Vietnam -RoKinvestment-trade ties” – was organised by the Global Commerce Institute Lee& Ko, the RoK’s Trade-Investment Promotion Agency and the Vietnam Chamberof Commerce and Industry.
At the event, delegates assessed achievements in Vietnam’s bilateraltrade ties after three years of the Vietnam-Korea Free Trade Agreement (VKFTA)and discussed remaining issues.
“Vietnam is the RoK’s fourth biggest trade partnerafter China, the US and Japan,” Bark Tae-ho said. “Two-way trade jumpedfrom 500 million USD in 1992 to 64 billion USD in 2017, 14.8 billion USD ofwhich came from Vietnam’s exports, up 30 percent from the previous year, and 46.7billion USD from its imports, up 45.3 percent.”
“Two-way trade is expected to grow to 100 billion USD by2020, equivalent to an annual increase of 18 per cent over the next two years,”he said.
“The RoK is the third largest export market for Vietnam after the US andChina,” he said. “It is also Vietnam’s second largest import market behindChina.”
Since the VKFTA took effect in 2015, Korean firms havecapitalised on lower tariff duties under the FTA to boost exports to Vietnam whileVietnamese firms have not taken the same step. As a result, Vietnam’s tradedeficit with the Republic of Korea has widened sharply, Bark said.
According Bark, exports from the RoK to Vietnam in 2017 wereworth 48 billion USD, up 70 percent after three years of the VKFTA. However,exports from Vietnam to the RoK that year reached only 17 billion USD.
In 2017, Korean firms poured 1.9 billion USD into projects inVietnam, which spent only 4 million USD on projects in the RoK.
The RoK remains by far the largest foreign investor inVIetnam, having signed on to pour 58 billion USD into more than 6,500 foreigndirect investment (FDI) projects in the country as of the end of October, saidNguyen Duy Loi, Deputy Editor-in-Chief of the World Economic and PoliticalIssues, Institute of World Economics and Politics under the Vietnam Academy forSocial Science.
“Vietnam is a key investment destination of Korean firms inthe ASEAN region,” Loi said. “Among 8,600 Korean enterprises investing inASEAN, about 5,500 are in Vietnam.”
“Assessing products imported from Vietnam to the RoK bytechnological level, 44 percent of the products are using low technology andonly 20 percent of them use high technology,” said Heo Yoon, a professor fromSogang University Graduate School of International Studies and President of theKorean Association of Trade and Industry Studies. “The rest use mediumtechnology or are resource-based products.”
He added that Korean investment in Vietnam is moving fromlabour-intensive industries to capital-intensive industries, especially inmanufacturing sectors.
In the future, Vietnam and the RoK should speed up thenegotiation of the Regional Comprehensive Economic Partnership (RCEP), promoteinfrastructure exports from the RoK to Vietnam, widen and deepen the machineryproduction network between the two countries and accelerate technology transferfrom the RoK to Vietnam as the Vietnamese government has changed the FDIstrategy to induce more high-value-added industries, Heo said.-VNS/VNA
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