Bark Tae Ho, South Korea’s former Minister of Trade, spoke on the topic during a seminar in Ha Noi on Friday.

The seminar – themed “Future prospects for Viet Nam-South Korea investment-trade ties” – was organised by the Global Commerce Institute Lee & Ko, South Korea’s Trade-Investment Promotion Agency and the Viet Nam Chamber of Commerce.

At the event, delegates assessed achievements in Viet Nam’s bilateral trade ties after three years of the Viet Nam-South Korea Free Trade Agreement (VKFTA) and discussed remaining issues.

“Viet Nam is Korea’s fourth biggest trade partner after China, the US and Japan,” Bark Tae Ho said. “Two-way trade jumped from $500 million in 1992 to $64 billion in 2017, $14.8 billion of which came from Viet Nam’s exports, up 30 per cent from the previous year, and $46.7 billion from its imports, up 45.3 per cent.”

“Two-way trade is expected to grow to $100 billion by 2020, equivalent to an annual increase of 18 per cent over the next two years,” he said.

“South Korea is the third largest export market for Viet Nam after the US and China,” he said. “It is also Viet Nam’s second largest import market behind China.”

Since VKFTA took effect in 2015, South Korean firms have capitalised on lower tariff duties under the FTA to boost exports to Viet Nam while Vietnamese firms have not taken the same step. As a result, Viet Nam’s trade deficit with Korea has widened sharply, Bark said.

According Bark, exports from Korea to Viet Nam in 2017 were worth $48 billion, up 70 per cent after three years of VKFTA. However, exports from Viet Nam to Korea that year reached only $17 billion.

In 2017, Korean firms poured $1.9 billion into projects in Viet Nam, but Viet Nam spent only $4 million on projects in Korea.

South Korea remains by far the largest foreign investor in Viet Nam, having signed on to pour US$58 billion into more than 6,500 foreign direct investment (FDI) projects in the country as of the end of October, said Nguyen Duy Loi, Deputy Editor-in-Chief of the World Economic and Political Issues, Institute of World Economics and Politics under The Viet Nam Academy for Social Science.

“Viet Nam is a key investment destination of South Korean firms in the ASEAN region,” Loi said. “Among 8,600 Korean enterprises investing in ASEAN, about 5,500 are in Viet Nam.”

“Assessing products imported from Viet Nam to Korea by technological level, 44 per cent of the products are using low technology and only 20 per cent of them use high technology,” said Heo Yoon, a Professor from Sogang University Graduate School of International Studies and President of the Korean Association of Trade and Industry Studies. “The rest use medium technology or are resource-based products.”

He added that Korean investment in Viet Nam is moving from labour-intensive industries to capital-intensive industries, especially in manufacturing sectors.

In the future, Viet Nam and Korea should speed up the negotiation of the Regional Comprehensive Economic Partnership (RCEP), promote infrastructure exports from Korea to Viet Nam, widen and deepen the machinery production network between the two countries and accelerate technology transfer from Korea to Viet Nam as the Vietnamese government has changed the FDI strategy to induce more high-value-added industries, Heo said.