Vietnam seen as S Korea’s entry to Asean

SOUTH Korea’s investment played a key role in the cooperation with Vietnam, but the linkage between foreign direct investment and the domestic sector remained relatively weak.

Vietnam is seen as a gateway for businesses from South Korea to enter the Asean market, said experts at a forum in Hanoi on Monday.

The forum on South Korea’s New Southern Policy and the importance of South KoreaVietnam relations was co-organised by the National Centre for Socio-economic Information and Forecasting (NCIF), and the Korean Institute for International Economic Policy (KIEP).

In his opening speech, NCIF Director Tran Hong Quang said over the past three decades, Vietnam-South Korea relations have seen fine developments in all fields. At present, South Korea is one of the two largest foreign investors in Vietnam with accumulated capital of $57.6 billion by the end of last year. Vietnam is also the fourth largest investment destination and the biggest aid recipient of South Korea.

South Korea is the second largest trade partner ofVietnam, with two way trade increasing 117 times since 1992, when the two nations set up their diplomatic ties, hitting $61.5 billion last year.

The two countries have also seen positive collaboration in labour, culture and tourism.

By the end of last year, theVietnamese community in South Korea numbered 162,000, most of them are guest workers, those getting married to South Koreas, and students. Meanwhile, around 150,000 South Koreans, mostly businesspeople, are living in the Southeast Asian nation.

“Vietnam always attaches importance to and wishes to deepen the strategic cooperative partnership with South Korea, which gives high priority to collaboration with Asean, including Vietnam,” said Quang.

KIEP President Lee Jae-young said the New Southern Policy aims to raise South Korea’s cooperation and diplomatic relations with Asean countries and India on par with those with the US, China, Japan and Russia.

Notably, in its economic relations with Asean – a focus of the policy, Vietnam plays a crucial role, accounting for more than half of cooperation in almost all fields such as trade, investment, official development assistance and people-to-people exchange.

Korea University’s Park Bunsoon said there were many areas in which South Korea and Vietnam could further cooperate, including in the development of high-tech industries, Vietnam’s restructuring of stateowned enterprises, trade and investment.

“Korean investment would continue to flow intoVietnam in the future,” Park said.

South Korea’s investment played a key role in the cooperation between the two countries but linkage between foreign direct investment and the domestic sector remained relatively weak.

He said the capital flow from South Korea should be encouraged to develop Vietnamese small- and medium-sized enterprises and the part-supply industry. At the same time, Vietnam should develop its capacity to absorb technologies by enhancing cooperation in research and development.

“Vietnam also needs to provide opportunities for Korean investors to participate in mergers and acquisitions.”

Stressing the role of Vietnam in Asean, Prof Park said that South Korea might seek a ‘Vietnam +1’ strategy, adding that businesses from both sides could make joint efforts to enter neighbouring markets.

Tran Toan Thang from NCIF said that as part of the New Southern Policy it was important to link South Korea to Asean through Vietnam.

Thang pointed out the large and increasing trade deficit with South Korea and poor linkage between Vietnam’s domestic firms and South Korean firms remained issues to be addressed i n boosting cooperation between the two countries.

Another problem was the low percentage ofVietnamese enterprises – only 33 per cent in the first six months of this year – taking advantage of the VietnamSouth Korea free trade agreement ( VKFTA) d u e t o unawareness of Vietnamese firms and the unavailability of a proper certificate of origin system for Vietnamese firms.

“It is critical to strengthen linkages between Vietnamese and South Korean firms and improve awareness of Vietnamese firms on rules of origin under the VKFTA,” Thang said.

Additionally, focus should be placed on promoting the consumption of Vietnamese goods in South Korea and establishing a network connecting businesses on both sides, he said.

At the conference, KIEP and NCIP signed a renewed memorandum of understanding.