Vietnam-South Korea strengthen bilateral relations
On the occasion of the 30th anniversary of Vietnam and South Korea diplomatic relations, representatives of the two countries met to reiterate their relationship for a stronger comprehensive strategic partnership.
In a talk with Saigon Investment, Mr. HONG SUN, Chairman of the Korean Business Association in Vietnam (KORCHAM), said that theirs is a special relationship in which they aim for deeper economic cooperation between both countries in the future.
JOURNALIST: - Sir, how do you evaluate the results achieved in trade relations between the two countries so far?
Mr. HONG SUN: - Since we signed our joint trade relations, South Korea and Vietnam have established a successful cooperation record and have become trusted partners in the various fields of trade and investment.
Looking back at the results of the last 30 years, it can be said that economics has been the biggest achiever in the cooperation between the two sides. Trade transactions between the two countries in the first year of establishing diplomatic relations reached only USD 500 mln in 1992, but after nearly 30 years this number has increased to USD 78 bln by 2021 and expected to reach USD 100 bln by next year. South Korea is Vietnam's third largest trading partner, while Vietnam is South Korea's fourth largest trading partner.
It is very interesting to see that for a long time, public opinion has only talked about South Korean enterprises investing in Vietnam, but in fact there are many Vietnamese enterprises investing in South Korea as well. These achievements are because of the firm determination of senior leaders and the Governments of the two countries, along with the continuous effort of enterprises as well as the connecting role of KORCHAM.
- Sir, which field is the investment capital of South Korean enterprises currently focused on in Vietnam?
- South Korean enterprises have been present in all areas of Vietnam's economy, from apparel, electronics, infrastructure, energy, automotive, aerospace, real estate, banking and finance, start-ups to SOE equitization, logistics and services. I think that the next phase will be a shift and not just direct investment, but focus on indirect investment, because capital in South Korea is abundant with relatively low capital costs.
South Korean companies have contributed capital to buy shares in many Vietnamese companies, such as SK Group invested USD 1 bln in Vingroup and USD 470 mln in Masan Group, and KEB Hana Bank acquired 15% of charter capital of Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV).
Up until now, there have been 16 financial companies that are members of The Korea Financial Investment Association (KOFIA) operating in Vietnam in the field of stock trading, and derivatives market, with a total investment of billions of US dollars.
South Korean corporations are present in Vietnam more and more in the financial sector to provide services to South Korean enterprises and large Vietnamese corporations, due to a large customer network in South Korea and many other countries around the world. These are all corporations with strong financial potential in South Korea and the ability to raise capital at low prices.
Therefore, finance and banking are the fields that are expected to receive a strong investment wave from South Korea in the near future, with financial support of more than 9,000 South Korean enterprises operating in Vietnam. In addition, South Korean enterprises will invest heavily in the field of financial technology (fintech), when the Vietnamese Government completes the legal framework in this field.
- Sir, do you have any suggestions for Vietnam for improving the investment environment in a more favorable direction?
- South Korea has strengths in high technology, while Vietnam is realizing a digital transformation strategy in state management, as well as creating an attractive business environment corridor for domestic and foreign enterprises. Therefore, South Korean enterprises are willing to cooperate with Vietnam in digital transformation, cybersecurity, and biotechnology.
In Vietnam, a number of enterprises with large holdings also want to expand their investment into South Korea when they see potential markets and business development opportunities. For instance, in the food service industry, due to the differences in cuisine, Vietnamese businesses can successfully invest in South Korea. Agricultural products or dried, fresh, frozen fruits can be good areas for export and distribution investments in South Korea.
I hope that the Vietnamese Government continues to make reforms in administrative procedures, policies and laws for South Korean investors, and for experts and workers coming to invest and work in Vietnam, such as the visa rules, temporary residence card, and work permits for foreigners.
- Sir, what is your opinion on the recent visit to South Korea of President Nguyễn Xuân Phúc?
- The recent visit to South Korea of President Nguyễn Xuân Phúc was particularly important for the relationship between the two countries. During the visit, President Nguyễn Xuân Phúc and South Korean President Yoon Suk Yeol issued a joint statement agreeing to upgrade the two countries' bilateral relations to a comprehensive strategic partnership. As a result of this visit, the relationship has been upgraded to a new height after only ten years since the two sides agreed to upgrade to a Strategic Partnership on the occasion of the 20th anniversary of the establishment of the relationship in 1992.
Therefore, the two countries are expanding all relations and scales in economics, cultural, social and other fields, in which the economy is the mainstay. For the economy, the role of enterprises will bring prosperity, solve problems of growth, employment, maintain macro stability and budgetary law.
