08:15 | 28/01/2014 Cooperation
(VEN) - In the last 20 years relations between the Republic of Korea (RoK) and Vietnam have developed strongly, particularly since the two parties decided to establish a strategic partnership in 2009. Vietnam Economic News’ reporter Nguyen Huong talked with RoK Ambassador to Vietnam Jun Dae Joo on the occasion of the Lunar New Year.
Economics has been the most effective area of cooperation between Vietnam and the RoK in the last 20 years. Could you please tell about major achievements in this field?
First of all, I would like to congratulate Vietnam for its strong progress since its Doi Moi reforms of 1986. The Republic of Korea is quite pleased to celebrate the 20th anniversary of development cooperation with Vietnam last year. Statistics show that bilateral trade between the two countries reached US$21.7 billion in 2012 growing by 44 fold against 1992, the establishment year of bilateral diplomatic ties, which surpasses three years earlier than the goal set for 2015. Despite of global economic crisis, bilateral trade reached US$23.4 billion up to October 2013.
Regarding investment, Korea is one of the most important investors in Vietnam, along with Japan, Singapore and Chinese Taipei. Currently, there are more than 3,000 Korean enterprises investing in Vietnam with total capital of US$28.5 billion as of November 2013. Hyundai, LG, Lotte, Posco and Samsung are among the leading investors in Vietnam. For Korea, Vietnam is the 4th biggest trade partner after the US, China and Hong Kong-China.
Previously, majority of foreign companies focused on labor-intensive industries such as garment and textiles to take advantage of young and abundant labor force of Vietnam. However, as you can see from the most recent case of Samsung’s plant relocation from China to Vietnam, more and more Korean companies are paying attention to value-added industries such as electronics and support industries. This is because Korean companies have begun to recognize the growing consumer market in Vietnam as well as the country’s strategic location. These are suitable changes toward modern industrialization objectives of Vietnam’s Government as well as economic cooperation of mutual benefit and co-prosperity between the two countries in the long term.
The RoK direct investment flow into Vietnam is increasing day by day, especially into high technology. What should Vietnam do to make the most of capital inflows to invest in high technology? What is the prospect for investment cooperation between the two sides this year?
Vietnam is a highly attractive destination for foreign investment. In a Vietnam Business Forum held in early December 2013 we could see the Government’s appreciable efforts in implementing policies to regain macroeconomic stability that still attracts foreign investors since the onset of the global economic crisis. However, there are some areas for improvement while significant increase of FDI flow is focusing on hi-tech industries in Vietnam.
Firstly, government regulation needs to match actual business needs. Regulation on work permits for foreign workers is now limited in regard to attracting more highly skilled labor force to work in Vietnam.
Secondly, strategic policies are needed to encourage more government spending on incubating and to provide a skilled workforce as required in hi-tech industries and other necessary measures to foreign companies with an emphasis on the importance of human resource training in Vietnam.
And more importantly, even though hi-tech industries are important, we still see that labor-intensive industries like garment, textile and shoes remain to be Vietnam economy’s strengths and harmonization between industry sectors is essential for economic balance. Vietnam should not neglect to take advantage young and skilled labors in these industries besides attracting investment in hi-tech areas.
The coming years will be very important for Vietnam as it is the increasing attraction for Korean companies. If key issues are successfully addressed, Vietnam will be in a strong position to be a regional player for FDI in term of quality and quantity as it will boost investor confidence and can take advantage of young and skilled labor as one of the cheapest labor cost in region. As a result, it will help ensure that Vietnam remains an attractive and competitive destination for foreign investment.
Besides FDI flow, RoK is also one of the largest providers of ODA to Vietnam. Does RoK have any plan on increasing ODA for Vietnam in the next years? And which field do you want to focus on?
The Republic of Korea is most privileged to have been Vietnam’s development partner in its path tackling the three main breakthroughs of building infrastructure, working out institutional framework and focusing on human resources development. With our commitment of US$1.2 billion during 2012-2015, along with grant aid of around US$30 million annually, we are pleased to cooperate with Vietnam towards its becoming a modern industrialized country after Vietnam’s entry into the Middle Income Country in 2010.
During the recent state visit of President Park Geun-hye of the Republic of Korea, Korea agreed with Vietnam that science, technology and culture are crucial development enablers. Korea also agreed to work with Vietnamese authorities in remote rural areas or minority communities such as Quang Tri and Lao Cai to provide comprehensive development packages of health, education and poverty alleviation based on Korea’s past experiences. The efforts called “Happiness Program” will be carried out in cooperation with the private sector as well as civil society, which provides essential levels of balanced shared responsibility in the development process. Finally, but not lastly, Korea agreed to continue its assistance in building infrastructure, especially in a way to effectively promote infrastructure investment by embracing public-private partnership approach. This PPP approach will be applied to the Tan Van – Nhon Trach Road Construction Project, the first of Korea’s attempt in its development partnership project in Vietnam. The Republic of Korea pledges to do our best to turn these commitments into reality as planned.
What is your expectation on the cooperation between two sides in 2014? Do you have any plan to promote the economic cooperation between the two sides?
The President Park Geun-hye of the Republic of Korea’s state visit recently to Vietnam has renewed our commitments in assisting Vietnam to better cope with future challenges. In the statement, dubbed “Joint Statement of leaders for co-prosperity” released at that time, Vietnam and Korea agreed to expand bilateral trade volume to US$70 billion by 2020 as well as to speed up the ongoing free trade negotiations so that the two countries can finalize the agreement for a comprehensive level of free trade by 2014. As a way of looking ahead, Korea is currently building incubator park in Can Tho city which will support Vietnamese small- and medium-sized enterprises in technological innovation and push growth in industries, jobs, education and power resources which is necessary to advance a technology base for stimulating economic growth. This has proved the increasing and strengthening commitments in economic cooperation between the two countries.
As the Ambassador of RoK to Vietnam, first and foremost important mission next year, I will do my best to support the FTA negotiations for an early conclusion so that it will bring mutual benefits to both countries. I will also pay attention to those areas that are not covered by FTA negotiations, such as the exchanges of workforces, and sharing experience on how to overcome economic crises, etc. as the FTA would be of great assistance to bolster trade and investment between the two countries and to give the way to other missions.
Have you ever enjoyed Tet holiday in Vietnam? What is your feeling about Tet? Do you have any memory to share with us?
I have been in Vietnam for 19 years and seen intimate relation between Korea and Vietnam since the early years I was the chief representative of LG Chemicals in Vietnam. Vietnam and Korea maintained similar customs of celebrating Lunar New Year, from honoring ancestors to cleaning house to colorful parades. Unfortunately, I have not enjoyed a Tet in Vietnam fully yet because I often took a visit to my own family on this occasion and mostly enjoy before-Tet atmosphere. I was impressed by the vibrant shopping atmosphere of Vietnamese people when they prepare for the Tet over days or weeks with unique food, decorations, and other traditions for good luck in the coming New Year. Houses are given thorough cleanings, new clothes are bought, and family and friends gather to begin the New Year with a clean slate like Korea. Korean celebrate new year, called Sol-Nal, families and friends of all places keep alive the traditions of coming together to share in the hopes for a new beginning. I would definitely spend a Tet in Vietnam next year to feel this truly special Vietnamese occasion. Taking this opportunity, I wish Vietnamese families enjoy a joyous, healthy, and prosperous New Year./.