Vietnamese Ambassador to Korea Nguyen Vu Tung speaks during an interview with The Korea Times at the country's embassy in central Seoul, Dec. 20. Korea Times photo by Shim Hyun-chul

Vietnam poised to become Korea's 3rd-largest trading partner

By Kwon Mee-yoo

The importance of Vietnam increased dramatically for Korea after President Yoon Suk-yeol unveiled his Indo-Pacific Strategy in November. It calls for a stronger Korean presence in the region in order to diversify trade partners and secure global supply chains.

There are more reasons that boost the importance of the Southeast Asian country for Korea.

Vietnam is expected to become Korea's third-largest trading partner this year, surpassing Japan. Korea is the largest foreign investor in Vietnam with over 9,000 Korean companies operating there.

According to a report by the Federation of Korean Industries (FKI), Korea-Vietnam trade reached an all-time high of $81.1 billion as of November 2022, slightly more than $80.7 billion last year. The figure has seen an over 160-fold increase since 1992 when the two countries established diplomatic relations.

Vietnamese Ambassador to Korea Nguyen Vu Tung said the expanded bilateral ties were possible because of their thriving trade volume, underscoring that both sides are benefitting from the partnership.

"I think trade and investments are very closely related to each other. So, when we have higher levels of investment, that implies that we have a higher level of trade because investment projects require importing materials, technology or equipment," the ambassador said in an interview with The Korea Times at the Vietnamese Embassy in central Seoul, Dec. 20.

Comprehensive strategic partnership

The significance of bilateral ties is proven by Vietnamese President Nguyen Xuan Phuc's recent visit to Korea, which marked the first state visit to Korea since Korea's President Yoon Suk-yeol took office in May.

Phuc's visit marked a key moment in Korea-Vietnam ties as the two leaders agreed to elevate the relationship to a comprehensive strategic partnership.

The ambassador said that high-level exchanges are an effective way of building trust.

"I think it is important for President Yoon to build a context and make friends with the top leaders of Vietnam and other ASEAN countries. (Yoon) announced very important policies with regard to the region, the Indo-Pacific strategy and the Korea-ASEAN Solidarity Initiative (KASI). Together with the introduction of the policies, actually meeting with leaders of ASEAN countries, is also very important for him," the ambassador said.

He noted that the elevation of bilateral relations is a reflection of the vision of both leaders and signals the direction of future partnerships.

"The two sides agreed to enhance many aspects of the relationship ranging from political, diplomatic, security, defense, economic, cultural, social and people to people exchanges," he said.

The comprehensive strategic partnership between Korea and Vietnam encompasses diverse, traditional and new areas of cooperation and the two countries will jointly pursue the establishment of new supply chains for stable, sustainable access to important materials and minerals.

"New investment projects can be implemented in the areas of the real economy, digital economy, fintech, biomedical and pharmaceuticals. The new areas for cooperation opened up by the development of Industry 4.0 as well as by the geostrategic and geoeconomic situations," the ambassador said, noting that Korea and Vietnam should work closely with each other to ensure the international rules-based order.

"Small and medium countries like Vietnam and Korea are expected to contribute to making sure that international law is respected, multilateral organizations are respected … We look forward to having our bilateral relationship developing both qualitatively and quantitatively," he said.

Vietnamese President Nguyen Xuan Phuc, right, toasts glasses with his Korean counterpart Yoon Suk-yeol during a banquet in Seoul, Dec. 5. Phuc was the first foreign head of state to pay a state visit to Korea since Yoon's inauguration, signaling the growing importance of bilateral ties between Korea and Vietnam. Yonhap

Complementary economies

Vietnam is one of the fastest-growing economies in the region with political stability and a cultural affinity for Korea. The ambassador picked the reciprocity of the two countries and the regional and the global contexts as key factors in the strong partnership between Korea and Vietnam.

Korea has a strong manufacturing sector and is a leader in technology and innovation, while Vietnam has a growing and competitive labor force as well as a large market for consumer goods. This situation leads to a complementary relationship that allows both countries to benefit from bilateral trade and investment.

"(It is) the complementarity between the two economies ― what Korea lacks Vietnam can offer and vice versa. What we lack is the capital, technology and network of production and distribution by Korean global companies that are having FDI (foreign direct investment) projects in Vietnam. So that is what Korea can offer," he said.

"Vietnam can offer labor. We have young, skilled laborers. We have infrastructure that can host the FDI projects. And we have a big market ― the domestic market is close to 100 million people with a rising middle class and a higher purchasing power. Besides we have 15 FTAs (free trade agreements), bilateral and multilateral, that can make Vietnam the springboard for exporting goods produced in Vietnam. So, in total, they are very good and favorable conditions for Korea to do business in Vietnam, both in terms of trade and investment."

He added that the two countries have regional and global contexts that make each side important for the other.

"For example, (there are) the big powers competing and the conflict in Ukraine that disrupts supply chains, and Vietnam can help (Korea) with that. And the advancement of technology and science can open up new areas where Vietnam and Korea can work together in the digital economy," he said.

"In the other aspect of the context starts from the needs of Vietnam. Vietnam is now on a higher level of development, so we need a technological transfer. We find it more appealing to have economic cooperation with Korea," Tung added.

The ambassador said Vietnam seeks increased investments from Korea in infrastructure, transportation, energy, manufacturing, real estate development and financial services as part of modernization and industrialization efforts, but looks for opportunities in new areas such as cybersecurity, smart cities, digital media, environmental technology, biomedical and the pharmaceutical sector.

"It serves the two goals. Number one is to modernize Vietnam, especially through technological transfer, and number two is to get Vietnam into the supply chains and the network of production and distribution by Korean global companies," he said.

The ambassador added that Vietnamese people feel more comfortable working with Korean partners due to cultural similarities and recent developments in history.

"Korea is having very successful developments in its history. Now Korea is among the developed economies, but Korea can serve as the bridge between the developing countries and the developed ones based on its developmental experiences," he said.

"When we deal with the big powers, we understand that the big power has a global, geostrategic agenda, which we do not see in the case of our relations with Korea. Korea is a pivotal global player, but Korea's global approach is not similar to the approach of the big powers, which makes us feel more comfortable," he added.

Vietnamese Ambassador to Korea Nguyen Vu Tung speaks during an interview with The Korea Times at the country's embassy in central Seoul, Dec. 20. Korea Times photo by Shim Hyun-chul

Plans for 2023

Tung said his primary interest for the upcoming year is the implementation of the comprehensive strategic partnership.

"Like I said earlier, the two countries' leaders have agreed to elevate the relationship. So, the next step is to turn the vision and political will into effective action plans," he explained.

"In order to do that, I have priorities. The first is to connect the dots. That means I have to connect the partners that are in search of cooperation. That is what we often do, but now we have to find the most important partners from both sides to work with each other," he said.

The ambassador said his next priority is to solve problems.

"Because the more we cooperate, the more problems would arise. From the embassy, I will try to get the information and understand the state of affairs in order to have the two partners reduce the information gap and know more about the procedures in solving the problems here and in Vietnam," Tung said.

"The last priority is learning ... I need to acquaint myself with a wide range of partners from the government, businesses and localities as well as think tanks and the members of the Vietnamese communities. So the more I learn, the more I understand and the more effective the embassy will be," he added.