South Korea - A Vietnamese Core Partner

The relationship has developed rapidly over the past years, built up by the leaders and peoples of the two nations. In 2006, a total of 420,000 Koreans visited Vietnam, an increase of 30 per cent against 2005, making Korea Vietnam’s second ranking incoming tourist market that year. Every week, there are 31 flights between Vietnam and South Korea but all flights seem to be fully booked.

 

Since diplomatic relations were establishment in 1992, around 50,000 South Koreans now live in Vietnam and some 40,000 Vietnamese people are working in South Korea. The number of Vietnamese-Korean couples has mounted to 15,000.

 

South Korea’s total investment capital into Vietnam mounted to US$7.9 billion by late 2006, accounting for 18.5 per cent of foreign investment capital in Vietnam. South Korea is the third largest foreign investor in Vietnam. In 2006 alone, South Korea invested US$2.7 billion in 207 projects. Of the 2006 sum, 55 per cent was injected into heavy industry, 20 per cent in new urban zone construction and 10 per cent in hotel and apartment construction. The eleven biggest projects made up 79 per cent.

 

Year	2000	2001	2002	2003	2004	2005	2006
Number of projects	34	75	149	171	170	190	207
Investment capital (million USD)	67.9	109.3	269.5	343.6	377.4	551.6	2,700

Two-way trade value jumped from US$2 billion in 2000 to over US$4.7 billion in 2006.

 

South Korea exports equipment and materials to Vietnam while importing electronic parts and farm products from Vietnam.

Trade overview between South Korea and Vietnam (million USD)

 

Transaction	2000	2001	2002	2003	2004	2005	2006
Export	1,686	1,732	2,240	2,561	3,255	2,431	3,871
Import	322	386	470	510	673	694	843

First, South Korea provided non-refundable aid and technical assistance for Vietnam after the two countries established diplomatic relations in 1992. From 1991 to 2006, KOICA gave US$70 million non-refundable for 33 projects. Although the grant was small, the cooperation and execution of the aid programme was highly appreciated by both sides.

 

The largest non-refundable project was US$35 million aid for a general clinic in Chu Lai.

 

Besides, South Korea also gives aid through the Economic Development and Cooperation Fund (EDCF). To date, there are nine projects with combined capital of some US$200 million, including upgrading National Road 18 and building Thien Tan water plant and power plants. The government may raise aid to US$100 million.

 

At present, South Korean companies lack economic information and investment promotion policies in Vietnam. As for Vietnam, I think you must have more practical publicity and various investment promotion channels. As for the consulate general, we will actively cooperate with you to introduce Vietnamese information to South Korean companies.

 

Another matter is Vietnam’s lack of skilled labourers, making foreign investors hesitant because of the need to train their employees.