Republic of Korea – Vietnam economic ties flourish after FTA

Bilateral relations between Vietnam and the Republic of Korea (RoK), especially in trade and investment, have been growing rapidly nearly two years after the free trade agreement (FTA) between the two nations came into effect.

Two-way trade hit US$45.1 billion last year, a year-on-year increase of more than 20%. It experienced a yearly rise of 30% in the first seven months of this year to US$35.5 billion.

According to the General Department of Vietnam Customs, Vietnamese exports to the RoK grew by 28% in seven months to US$7.74 billion.

Among major staples, telephones and components ranked the first with a revenue of US$2.03 billion, representing a year-on-year increase of 35% and making up 26.3% of the country’s total export value.

Textile and garment was the runner-up with US$1.25 billion, up 18% year-on-year or equivalent to 16.2% of the total. Computers, electronics and parts came third with US$985.6 million, up 48% or 12.7% of the total while machines and equipment was followed with US$523 million, up 50% or 7% of the total.

Other items with positive export revenues included seafood with US$400 million; wood and wooden goods (US$354 million); footwear (US$233 million) beside to fibers (US$191 million); means of transport (US$141 million) and metal (US$97 million).

Bilateral trade between the two countries is expected to reach US$70 billion by 2020.

Investment by the Republic of Korean firms in Vietnam has also gone up significantly, rising to US$55.26 billion in January-July period, statistics from the Ministry of Planning and Investment’s Foreign Investment Agency revealed.

The reviewed investment, which accounted for 18% of Vietnam’s total registered capital, made the RoK become the largest foreign investor in the country, the data noted.

Speaking at a seminar on how to capitalize on the FTA held last month in HCM City, Yoon Joo Young, director of the Korea Trade-Investment Promotion Agency (KOTRA) in HCM City said Vietnam is the RoK’s third largest trade partner and the largest investment destination in the ASEAN bloc, with about 4,500 Korean firms operating in the country.

Yoon called on Vietnamese firms to contact the Vietnam-Korea Free Trade Agreement Support Center, which was established last year, for consultancy and accurate and detailed information on the FTA as well as for help to resolve difficulties related to non-tariff barriers and obtaining certificates of origin.

Other trade experts petitioned the two government need provide enterprises with sufficient information about the FTA in order to help them take full advantage of the trade deal.

The firms themselves, meanwhile, must actively study the FTA to better utilize untapped opportunities, experts said.

The Vietnam- RoK FTA took effect on December 20, 2015. It covers a wide range of aspects including goods and service liberalization, investment, intellectual property rights, measures on food hygiene and safety, rules of origin, customs facilitation, trade defense, technical barriers to trade, competition, economic cooperation, institutions and legal matters.

Under the trade deal, Korea removes 95.4% of tariff lines on imports from Vietnam while Vietnam eliminates 89.9% of tariff lines on goods imported from Korea within 15 years from the date of the pact taking effect, according to the Ministry of Industry and Trade’s Asia-Pacific Market Department./.

Source: Viettrade