21/06/2023 (South Korea) - Vietnam and South Korea have emerged as key economic allies, bolstering trade and investment ties that have seen significant growth over the years. As of 2023, South Korea is the leading foreign investor in Vietnam, boasting total accumulated investment capital of $81.3 billion. Simultaneously, it ranks as the third-largest trading partner to Vietnam, with trade figures hovering around the $87 billion mark.
The trajectory of trade growth between the two nations has been steady, with trade volume rising from $66.65 billion in 2019 to nearly $87 billion in 2022. Despite a minor contraction in 2020 when the trade value dipped to $65 billion, the figures rebounded in 2021, reaching $78 billion. The two countries have now set their sights on an ambitious target to escalate the trade value to $100 billion in 2024 and further to $150 billion by 2030.
To realize these goals, both nations have mutually agreed to work on narrowing the trade deficit. Vietnam, which had a trade deficit of $34 billion with South Korea last year, is focusing on reducing this gap. The country imports a range of products from South Korea, including electronics, machinery, metals, plastics, fabrics, and fuels. On the other hand, its key exports to South Korea include agricultural and aquatic products, seafood, and seasonal fruits.
A significant milestone in their economic relationship came with the upgrade to a comprehensive strategic partnership in 2022. This development has opened up avenues for deeper cooperation in key areas such as trade, energy and infrastructure construction, development cooperation, IT and communication, investment, health, and labor.
In line with South Korea's "New Southern Policy," the government has expressed an interest in aiding South Korean businesses to expand their footprint in Vietnam. This includes sectors such as eco-friendly infrastructure, clean energy development, finance, agriculture, medical, digital, and culture.
Bilateral and multilateral mechanisms like the Vietnam-South Korea Bilateral Free Trade Agreement (VKFTA) and the Regional Comprehensive Economic Partnership Agreement (RCEP) have been instrumental in fostering these economic ties. They provide a variety of collaboration frameworks that span multidisciplinary and sector-specific partnerships.
South Korean businesses have played a significant role in Vietnam's socio-economic development, creating job opportunities, modernizing infrastructure, and contributing tens of billions of dollars annually. Notably, about 8,000 South Korean enterprises are currently engaged in production and trade activities in Vietnam.
While the Vietnamese business and investment environment continues to appeal to South Korean businesses, there are areas for improvement. The Vietnamese government is looking to enhance its competitive edge by refining supporting policies, legal frameworks, and preferential schemes. The aim is to draw in larger projects with higher value and advanced technology from South Korean investors.