Vietnam - Korea economic cooperation: Raising both quality and quantity

South Korea is Vietnam's third largest trading partner (after China and the United States) with a bilateral turnover of 76 billion USD in 2023, Vietnam's third largest export market (after China and the United States) and Vietnam's second largest import market (after China).

In the first 5 months of 2024, the total import-export turnover of the two countries reached 32 billion USD, up 8.9% over the same period in 2023; of which Vietnam's export turnover to Korea reached 10.2 billion USD, up 10.9%, accounting for 6.5% of Vietnam's total export turnover - Photo: VNA

At the invitation of Prime Minister of the Republic of Korea Han Duck Soo and his wife, from June 30 to July 3, 2024, Prime Minister Pham Minh Chinh and his wife will pay an official visit to Korea. This is the first official visit by a senior Vietnamese leader to Korea since the two countries upgraded their diplomatic relations to Comprehensive Strategic Partnership in 2022; at the same time, it is the first visit to Korea by a Prime Minister in 5 years and also the first visit by Prime Minister Pham Minh Chinh since assuming the position of Head of Government. South Korea is Vietnam's third export market. Talking to the Government Electronic Newspaper, a representative of the Department of Asian and African Markets (Ministry of Industry and Trade) said that South Korea is the largest foreign investor in Vietnam with a total accumulated investment capital up to the end of December 2023 reaching 85.8 billion USD with 9,863 projects, accounting for 18.3% of total foreign investment capital in Vietnam.

Vietnam and South Korea established diplomatic relations in 1992 and upgraded them to a Strategic Cooperative Partnership in 2009; then in 2022, the two countries upgraded their relationship to a Comprehensive Strategic Partnership. Over the past 30 years, the relationship between Vietnam and South Korea has grown increasingly deep and extensive in many fields, especially in the economic field. South Korea has now become one of Vietnam's leading economic partners.

South Korea is Vietnam's third largest trading partner (after China and the United States) with a bilateral turnover of 76 billion USD in 2023, Vietnam's third largest export market (after China and the United States) and Vietnam's second largest import market (after China). In the first 5 months of 2024, the total import-export turnover between the two countries reached 32 billion USD, an increase of 8.9% over the same period in 2023; of which Vietnam's export turnover to South Korea reached 10.2 billion USD, an increase of 10.9%, accounting for 6.5% of Vietnam's total export turnover; Vietnam's import turnover from South Korea reached 21.7 billion USD, an increase of 7.9%, accounting for 14.7% of Vietnam's total import turnover; Vietnam's trade deficit with South Korea was 11.5 billion USD, an increase of 5.5%. Korean FDI enterprises contribute more than 30% of Vietnam's total export turnover (of which Samsung alone contributes up to 24%). Major Korean economic groups are operating strongly in Vietnam and play an important role in improving production and export capacity, helping Vietnam gradually participate more deeply and widely in the global value chain, especially in the fields of electronics, automobiles, mechanics, metallurgy, chemicals, textiles, footwear, etc. Notably, Korea is one of the few countries that have signed many bilateral and multilateral FTAs ​​with Vietnam such as: ASEAN - Korea Free Trade Agreement (AKFTA); Vietnam - Korea Free Trade Agreement (VKFTA); Regional Comprehensive Economic Partnership Agreement (RCEP). Korea is also a country with many cooperation mechanisms with Vietnam: Intergovernmental Committee; Deputy Prime Minister-level Dialogue Mechanism on Economic Cooperation; Joint Committee on Energy, Industry and Trade Cooperation; Joint Committee for the Implementation of the Vietnam - Korea Free Trade Agreement. Also according to the leader of the Asia - Africa Market Department, in recent years, trade between Vietnam and Korea has benefited greatly from bilateral and multilateral Free Trade Agreements (FTAs) that the two sides have participated in, especially the VKFTA. The structure of goods has little direct competition. Not only that, the export structure of the two sides is clearly complementary and has little direct competition. Vietnam mainly exports goods produced by Korean FDI enterprises (phones and components, computers, electronic products and components, machinery and equipment spare parts) and goods that Vietnam has strengths in such as agricultural and aquatic products, processed foods, textiles, footwear, and wooden furniture. On the other hand, South Korea is the second largest supplier after China for components, accessories, machinery, equipment, and raw materials as input materials for manufacturing industries, especially those serving Vietnam's exports. "South Korea is the country with which Vietnam has the second largest trade deficit. The trade deficit with South Korea is positive because it is the import of machinery, equipment, and raw materials for domestic production," the leader of the Asia-Africa Market Department informed, adding that in the long term, Vietnam still needs to pay attention to developing bilateral trade in a more balanced direction through applying various measures to facilitate and support Vietnamese enterprises to access the South Korean market in a diverse and effective manner. Focus on building an export ecosystem Mr. Pham Khac Tuyen, Trade Counselor of the Vietnam Trade Office in Korea, also said that the Korean market currently has a trend of simple food replacing family meals with instant, easy-to-cook, easy-to-eat products that are growing rapidly in Korea, especially in the past 5 years. Along with that is the rise of products that are good for health, increase resistance such as organic products, food for the elderly. Besides, there is a trend of consuming meat substitutes, protecting the environment with packaging that limits the use of plastic materials, ESG management models and regulations on food hygiene and safety, regulations and quarantine processes. For export products to be consumed well in Korea, Mr. Pham Khac Tuyen noted that in addition to quality and flavor, products also need supporting factors such as stability in production, safety in processing and circulation, and credibility in commitment. With these factors, businesses will have an advantage in negotiating and maintaining long-term partners. In addition, localities, associations and businesses need to spend time researching and analyzing the Korean market to clearly identify which consumer segments the products are targeting, and which products need to meet technical standards and especially pesticide residues (PLS system) in the Korean market.

On December 7, 2023 in Seoul, Korea, Vietnamese Minister of Industry and Trade Nguyen Hong Dien and the Korean Minister of Trade, Industry and Energy chaired the 13th Meeting of the Vietnam - Korea Joint Committee on Trade, Industry and Energy Cooperation and the 7th Meeting of the Joint Committee on the Implementation of the Vietnam - Korea Free Trade Agreement.

Industrial highlights In addition to trade cooperation, industrial technology cooperation is also focused on by senior leaders of the two countries. The two sides regularly organize meetings and sessions, creating opportunities for exchanges and investment promotion for businesses of the two countries. Regarding the industry and trade sector, at the 13th meeting of the Joint Committee on Industry, Trade and Energy Cooperation between the Ministry of Industry and Trade of Vietnam and the Ministry of Industry, Trade and Energy of Korea held in December 2023, the two sides agreed on a number of important cooperation contents such as: agreeing on the action plan to implement the Memorandum of Understanding on the establishment and operation of the Center for cooperation in technology of the essential mineral chain; promoting cooperation in the field of human resource transfer in the shipbuilding industry; agreeing to deploy the operation of the Vietnam - Korea Technology Consulting and Solutions Center (VITASK) to Phase 2 (from 2024-2028); strengthening investment connections and cooperation in the automobile industry; promote cooperation in the chemical sector; promote cooperation to improve the operational capacity of the Industrial Development Support Center (IDC) under the Ministry of Industry and Trade. Industrial cooperation between Vietnam and Korea is also implemented through investment activities of Korean enterprises in Vietnam. As the largest foreign investor in Vietnam, in recent years, Korean enterprises, especially international corporations such as Samsung, LG, Posco, Kia Motor, Huyundai Motor... have made important contributions to supporting and promoting Vietnamese industry, especially in the fields of electronics, automobiles, mechanics... to improve technology level and production capacity, especially to participate more and more deeply in the global supply chain. In relations with Vietnam, Korea pays special attention to cooperation and investment in the energy sector. Korean enterprises are playing an important role in promoting the development of Vietnam's energy industry, participating in almost all energy fields such as: Cooperation in oil and gas exploration and exploitation, cooperation in electricity development; cooperation in the field of clean energy and nuclear power development... During the working session with the leaders of Quang Nam province on June 27, 2024, Professor Lee Sang Keun - Head of the investment delegation of Jeollanam-do province (Korea) said that Vietnam in general and Quang Nam province in particular have a lot of potential and room to develop the clean energy and renewable energy industry. The working trip of the Jeollanam-do province business delegation to Vietnam this time is an opportunity for Korean enterprises to learn about the investment environment, strengths, culture as well as preferential policies and investment attraction in Vietnam. In addition, in recent years, the Vietnamese Ministry of Industry and Trade and the Korean Ministry of Industry, Trade and Energy have signed a number of specific Memorandums of Understanding (MOUs) as follows: MOU on cooperation in the field of renewable energy; MOU on comprehensive cooperation in the field of electricity industry... More than half of the Prime Minister's activities during his visit to Korea focus on the economic field. Talking to the press, Permanent Deputy Minister of Foreign Affairs Nguyen Minh Vu said that more than half of Prime Minister Pham Minh Chinh's activities during his visit to Korea this time will focus on the economic field. Economic cooperation has always been a bright spot, an important pillar contributing to promoting the substantial development of bilateral relations. Through diverse activities with Korean economic circles during this visit, Vietnam expects the two sides to improve the quality and quantity of economic, trade, investment cooperation and supply chain diversification; Strengthening cooperation in future areas such as semiconductors, supporting industries, digital transformation, green transformation, circular economy, climate change response; promoting labor cooperation, cultural industry, tourism cooperation between the two countries. Thereby, the two sides can realize the goal of soon increasing bilateral trade turnover to 100 billion USD and aiming for 150 billion USD by 2030 in a balanced and sustainable direction, and contributing to the implementation of the "Strategic Vision" on national development with the goal of becoming a high-income developed country of Vietnam by 2045. Source: https://baochinhphu.vn/hop-tac-kinh-te-viet-nam-han-quoc-nang-tam-ca-chat-va-luong-102240630145735179.htm