The Viet Nam - South Korea Free Trade Agreement (FTA) signed on May 5 is expected to bring positive effects to many of the countries' economic fields.
The FTA will create new opportunities for cooperation, but, more importantly, for Viet Nam it will further develop the fundamentals of their business environment and social resources.
These developments will strengthen the base upon which Viet Nam's economy can be restructured for sustainable development, said Hong Sun, Secretary General of Korcham in Viet Nam (the Korea Chamber of Commerce and Industry), in an interview with the Vietnam News Agency.
|Secretary General of Korcham in Viet Nam Hong Sun
What opportunities and challenges does this new FTA create for South Korean and Vietnamese enterprises?
The FTA will bring export and investment chances for large South Korean enterprises already doing business in Viet Nam. It will also be a great opportunity for small and medium-sized South Korean enterprises entering Viet Nam's market.
South Korean companies will also have a chance to develop software and farming products in Viet Nam for both local and foreign markets.
South Korean companies have paid attention to the large potential of Viet Nam's agricultural sector, so our companies will plan capital and high technology investments in Vietnamese farming and fishery products for export to South Korea.
Investment in Viet Nam's agricultural sector will increase export values and help the sector move towards sustainable development. Viet Nam will have to modernise their preservation and processing systems for farm products to reach the quality standards of our export market.
If Viet Nam develops a huge cold-storage system, they could keep out-of-season products for sale the whole year, thereby improving regulation of local and export markets.
Viet Nam should have a large trading floor for farming, forestry and fishery products to erase intermediaries between farmers and customers. It would mean more profit for farmers and increase the efficiency of export activities.
The FTA is a chance for both countries' enterprises to work towards reaching the 2020 target of US$70 billion in bilateral exports.
What are weak points in Viet Nam's enterprises, especially with regard to integrating into the international economy?
Viet Nam must compete with neighbouring countries in the region - Malaysia, Indonesia, Thailand, the Philippines and even Myanmar and Cambodia now.
All these countries offer a lot of favourable conditions to attract foreign companies' investment, including South Korean companies.
Therefore, Viet Nam's enterprises should have more knowledge about and study global economy development, foreign investors and foreign markets. Then they would be able to follow movements in global economic development and stay abreast with their competitors.
Additionally, Viet Nam should organise seminars with experts who can talk to Vietnamese enterprises about the content of the countries' free trade agreements, including the Viet Nam and South Korea FTA.
Korcham already held a similar seminar on May 13 in South Korea to inform 200 local enterprises about the FTA. The chamber has also posted information about the FTA on its website for South Korean enterprises. The chamber will hold discussions with enterprises to talk through FTA-related issues and schedule the opening of markets.
South Korea is already the largest investor in Viet Nam. What Vietnamese sectors will be able to attract more foreign direct investment?
South Korea has 4,000 enterprises registered and operating in Viet Nam. But, after signing the FTA, many Korean enterprises that hadn't paid attention to Viet Nam now want to study Viet Nam's market.
Attention will be on investment and development in high technologies, electronics and textile production sectors.
Korean companies will likely invest in the farming sector because the FTA creates more room for growth in Vietnamese farming exports to South Korea.
Additionally, South Korean companies will increase investment in Viet Nam to raise export quality.
Samsung has invested in home appliances in HCM City. LG, South Korea's second biggest electronic company, also just opened another factory in Hai Phong.
They will expand their investments to incorporate garment, bag and footwear sectors in Viet Nam. — VNS