The Vietnam - Korea Free Trade Agreement (KVFTA) was signed on May 5, 2015 and officially entered into force on December 20, 2015. To create favourable conditions for businesses and investors of the two countries to effectively capitalise on this FTA, thus boosting bilateral trade and investment, the Government of Korea decided to establish KVFTA Support Centre in Hanoi and Ho Chi Minh City, administered by the Korea Trade-Investment Promotion Agency (KOTRA). On March 4, the Korea-Vietnam FTA Support Centre in Ho Chi Minh City was officially opened and put in operation. On the sidelines of this event, Vietnam Business Forum interviewed Mr Roh In Ho, Vice President of KOTRA. My Chau reports.
Could you please introduce the specific roles and tasks of two Korea-Vietnam FTA Support Centres in HCM City and Hanoi?
The two centres are responsible for providing free consulting and counselling services for Vietnamese and South Korean entrepreneurs and businesses to seek best tariff cut preferences in KVFTA to raise mutual bilateral trade. The centres also provide necessary information for South Korean investors carrying out investment projects or seeking to invest in Vietnam, thus helping them to benefit from tariff reductions based on KVFTA.
In addition, the centres will organise regular seminars on FTA, publish guidelines for FTA application, and survey successful applications of the FTA to acquire and share experience. At the same time, they will inspect non-tariff barriers to trade such as customs procedures and certification; strengthen cooperation of governmental agencies of the two countries to support companies seeking to utilise FTA for investment, production and trade expansion.
KVFTA Support Centres are ready to welcome businesses and investors of both nations to seek information and guidance relating to KVFTA such as preferential tax rates applied in Vietnam or South Korea to specific items, tax reduction roadmap for specific products, and guidelines for certificates of origin (C/O) to enjoy KVFTA tariff preferences. To prepare for consulting services, KOTRA has increased tariff professionals. In addition, Advisory Boards for KVFTA Support Centres will be attended by experts in tariff, law, customs, logistics, intellectual property and other specials to provide best consultations for businesses and investors.
How has KVFTA impacted the bilateral trade relations and business relations?
Since the establishment of diplomatic ties in 1992, the two-way trade turnover has increased 70 times, from US$500 million in 1992 to US$37.6 billion in 2015. Currently, Vietnam is a leading trade partner of South Korea in ASEAN. KVFTA is expected to bring the bilateral trade turnover to US$70 billion in 2020.
KVFTA will enormously benefit both nations as it is based on commitments of ASEAN - Korea Free Trade Agreement (AKFTA) and is widened. Accordingly, South Korea pledged to open the market for 95.4 per cent of more than 11,000 tariff lines on products imported from Vietnam, including its major exports like seafood, tropical fruits, apparels, wood products and mechanical products. For its part, Vietnam is committed to eliminating tariffs for 89.9 per cent of tariff lines on products imported from Korea according to a 15-year roadmap, long enough for Vietnamese companies to enhance competitiveness and consider import demands.
KVFTA is expected to elevate Vietnam - Korea strategic partnership in many aspects like economy, culture and society. For Korea, its key exports like raw materials and parts which have tariffs removed by Vietnam are hoped to jump high in export value. Its essential consumer goods like small appliances and cosmetics will be imposed lower duties, thus widening the way into the Vietnamese market. Meanwhile, Vietnam’s key exports to Korea like agricultural products, seafood and apparels will be expanded. In addition, improving investment policies and environment will help enhance the competitiveness of Vietnam’s industrial products and services.
You have mentioned that KVFTA will facilitate Vietnam’s key exports to Korea like agricultural products, seafood and apparels. So, what opportunities will this agreement bring to Vietnam's agricultural sector?
Vietnam is endowed with more favourable conditions than Korea. Its soil and climate are very suitable for the development of many high-value agricultural products. As soon as KVFTA takes effect, many of Vietnam’s agricultural products such as garlic, ginger, beefsteak plant, mango, durian and processed agricultural products such as soybean oil, soy sauce and wine will imposed gradually reduced tariffs as pledged. Even among 525 product lines classified sensitive and very sensitive according to the ASEAN - Korea FTA, 122 product lines are included in the tariff reduction roadmap according to KVFTA. This will open up enormous opportunities for Vietnam to promote agricultural exports.
Besides, Vietnam and South Korea also agreed to strengthen cooperation in livestock production, rice production and food processing. To implement this agreement, the two countries have launched a number of agricultural cooperation plans, including scientific and technical support, training, human resources, information exchange, expert exchange and conferencing.
Mr Park Noh Wan, Korean Consul General in HCM City
After nearly 25 years of diplomatic relations, Vietnam - South Korea cooperation has been raised to a strategic partnership level and constantly developed well in all aspects, especially trade and investment. Commercially, South Korea has become the third largest trading partner of Vietnam since 2013 while Vietnam has also been a big trade partner of South Korea. On investment, South Korea currently takes the lead of all countries and territories investing in Vietnam.
The recently enforced KVFTA will become an effective catalyst to bring Vietnam - South Korea bilateral ties to new highs. This FTA represents the spirit of co-existence and mutual development support, while bringing opportunities to attract investment and promote export of agricultural products to the South Korean market.
Ms Nguyen Thi Thu, Vice Chairwoman of HCM City People’s Committee
We appreciate cooperation spirit and important contribution of South Korean businesses and investors in recent years to the socioeconomic development of Vietnam in general and Ho Chi Minh City in particular.
KVFTA, which formally entered into force on December 20, 2015, will provide favourable conditions for Vietnamese and South Korean enterprises to tap trade and investment preferences the two countries grant each other, thus helping raise the bilateral trade and investment ties, including HCM City - South Korea ties. Specially, the formation of the KVFTA Support Centre in HCM City shows the interest and trust of the Government and the business community of South Korea in the city’s development potential and investment environment. With its given roles and functions, the centre will become a practical bridge that connects the business communities of the two countries, provides useful information and favourable conditions for them to invest and do business for the sake of mutual interests and development.
Mr Park Juno, Marketing Manager, Happy Cook Company
Happy Cook is a wholly South Korea-invested company in Vietnam. We have been in Vietnam for 18 years and constantly expanded our production and business scale. In addition to three factories manufacturing household goods and kitchenware, we also import goods from South Korea.
The enforcement of KVFTA will bring more opportunities for South Korean companies doing business in Vietnam. Lower tariff rates by the time according to the roadmap will enhance the competitive advantages of South Korean products over Chinese rivals in Vietnam. Seizing this opportunity, Happy Cook is currently considering plans for production and business operations expansion.
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