The Vietnam - South Korea Free Trade Agreement (VKFTA) signed on May 5 reflects a high level of commitment from both sides and is set to both challenge and benefit the Vietnamese economy in the future, reports Vietnam News Agency.
In a recent interview granted to VNA, head of the Trade Promotion Agency under the Ministry of Industry and Trade, Bui Huy Son said Vietnam will see an unprecedented opportunity to sell strong products to South Korea, such as farm produce, seafood, fruits, garments, footwear, electronics and wooden furniture.
These will enjoy a zero per cent tariff when import fees used to stand at 200-400 per cent.
Vietnam can also now afford to import raw materials for domestic production and consumption, and export to a third country, including those used in garments, footwear, plastics and automobiles.
A wave of Korean capital will flow into Vietnam, bringing with it technological advances and standard management skills to the country.
South Korea - the largest investor in Vietnam so far with US$83.1 billion committed to nearly 4,300 projects - has become the most developed nation in the Organisation for Economic Cooperation and Development (OECD).
At socio-political and diplomatic levels, it is expected that labour-intensive sectors in low-and middle income groups, including garments, footwear and agro-fisheries, will reap the most benefits from the FTA.
Asked about what challenges the FTA will pose for Vietnam, Bui said the State agencies must fine-tune legal regulations in line with international standards while improving personnel capacity.
For the business community, the greatest challenge is rising competition once Vietnamese and Korean firms penetrate each other's markets, offering consumers a myriad of choices at increasingly lower costs.
To facilitate Vietnamese exports to South Korea, Bui said there are various trade fairs held annually in the country, such as the Seoul Food Industry Fair, where Vietnamese exhibitors are able to meet consumers and new partners.
The agency also holds working trips for hundreds of Korean importers to Vietnam to seek ventures.
Source: Bernama
Key words: Opportunities, Challenges, Vietnam, South Korea, Free Trade Pact
