|Kawk Sung-il, Director of the KIEP’s security strategy centre, talks to a Vietnam News Agency reporter. —VNA/VNS Photo
SEOUL — Việt Nam needs to have protective policies to encourage companies from the Republic of Korea (RoK) to voluntarily transfer technology to Vietnamese partners through their projects in the Southeast Asian nation, according to a scholar from the Korea Institute for International Economic Policy (KIEP).
In a recent interview granted to Vietnam News Agency on the upcoming international conference on RoK – Việt Nam cooperation, Kawk Sung-il, Director of the KIEP’s security strategy centre, said Vietnamese companies should pay great attention to developing their own technologies in parallel with promoting international cooperation, thus making technology transfer through cooperation with foreign companies operating in the domestic market more effective.
The RoK – Việt Nam bilateral relations have developed strongly over the past three decades and reaped fruitful achievements, especially in terms of economics, he said, adding that the two sides need to discuss more cooperation methods to develop sustainably the relations in the future.
According to Kwak, economic cooperation is a bright spot in the bilateral relationship with Việt Nam now being the 3rd largest trading partner of the RoK.
At the time when the two countries established diplomatic relations in 1992, the two-way trade turnover stood at just US$490 million, equivalent to 0.3 per cent of the total trade revenue of the RoK. However, 28 years later, in 2020, the figure increased to 7 per cent.
In terms of investment, the RoK becomes the largest foreign direct investor in Việt Nam. In 2021, due to the impact of the COVID-19 pandemic, the RoK’s investment in Việt Nam decreased, but many Korean companies still ranked Việt Nam as the most promising country among the ASEAN member nations.
However, the official also mentioned the trade imbalance between the two countries, saying that as two-way trade increases, the imbalance also gradually worsens.
Increasing Việt Nam's agricultural exports to the RoK can help resolve the trade imbalance, but this is only a short-term remedy, he said, adding that Việt Nam needs to have solutions to attract more investment from the RoK, thus helping Vietnamese companies participate in the RoK’s production network.
If a strong supply chain between the two countries can be formed, the bilateral mutual relationship will be promoted more sustainably, he affirmed.
He also noted that Việt Nam has been making great efforts to attract foreign investment. In June 2020, the National Assembly of Việt Nam approved the amended Invest Law which took effect in 2021. This is considered a great effort of the Vietnamese Government in enhancing the transparency of the institution via legal regulations.
The expert suggested that Việt Nam needs to promote production and technology capacity to join the supply chain.
When analysing Việt Nam's export value, it can be seen that the proportion of domestic added value is still low, according to Kwak Sung-il. This means that most of the production, components and spare parts are located abroad and the product localisation rate is low. By the end of 2017, among the total of 26,700 FDI projects in Việt Nam, only 600 projects had technology transfer contracts.
In comparison with other ASEAN countries like Indonesia, Malaysia, the Philippines and Thailand, the rate of added value in Vietnamese products is still low. Therefore, Vietnamese companies need to pay more attention to developing technologies together with international cooperation, thus helping to improve the effectiveness of technology transfer through cooperation with foreign companies operating in the domestic market, he said. — VNS