Vietnam and South Korea officially
inked the VKFTA in Ha Noi on May 5, 2015. The Ministries of Foreign
Affairs, on Dec.16, exchanged a diplomatic note, setting the effective
date of the VKFTA on Dec. 20, 2015.
New opportunities for the two countries’ enterprises
Accordingly, businesses from the two
countries will enjoy many trade and investment incentives, contributing
to boosting bilateral cooperation.
Right after the VKTAT comes into
effect, the two sides will establish a ministerial level joint committee
and subcommittees on goods trade, customs, trade defence, sanitary and
phytosanitary (SPS) measures and technical barriers to trade (TBT) to
accelerate the implementation of the agreement.
In 2014, South Korea was the third
largest trade partner of Viet Nam after China and the US. Viet Nam’s
export to South Korea posted at US$7.1 bln, up 7.9%, and its import at
US$21.7 bln, up 5%. Main export products to South Korea from Vietnam
were garment-textile with total turnover at US$21.7bln; fisheries at
US$645mln; computers, electronic components at US$395mln, furniture at
US$489mln…
And items posting the largest import
value from South Korea in 2014 and 2015 comprised of computers,
electronic products and components with US$5.05bln; machines, equipment
and other accessories with US$3.1bln; various fabrics with US$1.8bln;
telephones and components with US$1.7bln…
As of Oct.20, South Korea surpassed
Japan to become Vietnam’s largest foreign investor, with total foreign
direct investment (FDI) of US$43.6 bln in 4,777 projects. In Binh Duong,
South Korea ranked third among foreign investors with 515 projects
capitalized at US$2bln.
Park Jin Ku, Chairman of
province-based South Korea Business Association said that many South
Korean investors are interested in Binh Duong as there is a favorable
investment climate together with the support of the local administration
in production and business. Thus, the VKFAT not only promotes the
export-import values between Binh Duong and South Korea, but also makes
the wave of South Korean investment into the province soar.
The VKFTA strengthens
bilateral trade between the two countries. In picture: Cotton fibre
being manufactured at KyungBang Vietnam Co. in Ben Cat town
Actively affirming strong point and seeking market
South Korea will eliminate tariff
for more than 95% of Vietnamese goods as the VKFTA comes into effect. In
return, 90% of goods imported from South Korea will be removed tariff
within 15 years from Dec.12, 2015. According to the General Department
of Customs, in the first 11 months of this year, bilateral trade fetched
US$33.6 bln, a year-on-year rise of 27.6%.
Phu Huu Minh, Deputy Director of
provincial Department of Planning and Investment said that since early
this year, Binh Duong has absorbed 25 new projects from South Korea and
14 extra-one with total investment capital of more than US$134mln.
Noticeably, there has been a strong increase for South Korean projects
in auxiliary industries.
Some South Korean projects with
great capital in Binh Duong include Kumho Vietnam Tire Co.Ltd.
capitalized at US$128.3mln; DCT Partners Vietnam Co.Ltd. totaling
US$100mln; Orion Vina Food Co.Ltd. with US$60mln…
Choi Je Ho, Director of Panko Vina
Co.Ltd. that has operated in Binh Duong for 13 years with 4 times
increasing capital said that the VKFAT will create advantageous
conditions for respective businesses to strengthen trade exchange and
pour investment capital into Binh Duong as well…
Phan Le Diem Trang, Vice-Chairwoman
of Binh Duong Garment-Textile Association said: “We have exported
garment products into South Korea for a long time and reaped certain
success. Hence, right after the VKFTA was inked on May 2015,
province-based garment businesses have prepared plans to seek orders
exporting their products into the potential market”.
It is known that other strong
industries in the province like electronics, furniture, footwear…have
also rushed to learn about the VKFTA and promote their export into the
country.
According to Luong Ngoc Kim,
Vice-Chairman of Binh Duong Furniture Association (BDFA), the VKFTA will
be a great opportunity for Vietnamese enterprises to boost woodwork
export into South Korea. But, there are a lot of challenges when the
boisterous wave of South Korean investment in the industry flows into
Vietnam in general and Binh Duong in particular. Therefore, advocacy
from the local administration is needed to help domestic businesses
enjoy advantages when doing business with South Korean partners.
According
to data by the Foreign Investment Agency, Vietnam as of Nov., 2015 had a
total of 1,855 FDI projects licensed with total investment capital of
US$13.55 billion, a year-on-year increase of 1.1%. Thus, the country
absorbed US$20.22bln in FDI capital from newly-licensed FDI projects and
extra-ones over the past 11 months. South
Korea now takes the lead among 57 countries and territories investing
in Vietnam with total newly registered capital and increased capital of
US$6.3bln, accounting for 31.6% of total. It was followed by Malaysia
with US$2.53bln or 12.5% of total; Japan with US$1.72bln or 8.5% of
total. |
Reported by Khanh Vinh, H.H-Translated by K.T