Boosted by FTA
It has been found that the volume of bilateral trade between South Korea and Vietnam has shown a double-digit growth for two years in a row since the implementation of their FTA in 2015.
Specifically, the volume of South Korea’s trade with Vietnam increased 23.8% in 2015 and 20.1% in 2016. During the period, South Korea’s total international trade volume fell 12.3% and 6.4%, respectively. For the first 10 months of this year, the rate of increase in South Korea’s trade with Vietnam amounted to 43%.
Likewise, the ratio of Vietnam in South Korea’s total international trade is on the rise. It increased by 1.1 percentage points in each of 2015 and 2016 and Vietnam became the third-largest export destination for South Korea in October this year. The ratio of South Korea in Vietnam’s total international trade rose 11.2% in 2015, 12.4% in 2016, and 16.4% for the first 10 months of 2017, too. At present, South Korea is the second-largest trade partner for Vietnam behind China.
South Korea’s exports to Vietnam rose from US$27.8 billion to US$32.6 billion between 2015 and 2016 and then to US$39.3 billion until the end of October this year. Its trade surplus with Vietnam is on the increase as well. The ratio of Vietnam in South Korea’s total exports reached 8.3% in October.
According to the Korea Trade-Investment Promotion Agency (KOTRA), the positive effect of their FTA based on tariff reduction is particularly conspicuous in the category of intermediate goods such as electronic components, semiconductors, telecom devices and displays.
South Korea’s imports from Vietnam are increasing as well. The amount totaled US$9.8 billion in 2015 and US$12.5 billion in 2016. From January to October this year, it increased 28.6% from a year ago and reached US$13.3 billion.
The KOTRA explained that the rate of South Korea-Vietnam FTA utilization is 15% and 36.6% in Vietnam and South Korea, respectively. The organization pointed out that the figures are relatively lower than those regarding the other FTAs and both governments need to try to boost the figures.