Korea-Vietnam summit to expand economic ties

Friday’s summit between President Roh Moo-hyun and Vietnamese President Tran Duc Luong in Hanoi is expected to spur a host of exchanges between the two countries, especially on the economic front.
“Vietnam has achieved rapid economic growth since the establishment of diplomatic relations with South Korea in 1992, and the two-way trade volume between the two countries has increased six fold,” said Chung Woo-sung, presidential foreign policy adviser.
Chung said that the president will focus on supporting Korean companies’ efforts to expand business activities in and with Vietnam.
President Roh is also expected to discuss South Korea’s positions and objectives in the world trade talks called the Doha Development Agenda, discuss plans to form free trade agreements with foreign countries, and present South Korea’s vision to further develop its information and communications industries.
This is the third visit by a Korean president to Vietnam since the two states established diplomatic ties in 1992.
The two nations went through a strained relationship in the ’60s and the ’70s after Korea dispatched troops to the war with the US, to fight against North Vietnam, which won the war.
Close ties between Vietnam and North Korea had kept South Korea at a distance. But after the Soviet Union collapsed in 1991, the relationship rapidly changed, culminating in diplomatic recognition the following year.
Since then, Korea has played a big role in Vietnam’s economic reform.
By 2003, annual two-way trade between the two countries had swollen to more than US$31 billion. South Korea’s investment in Vietnam reached US$43.7 billion at the end of 2003, making Korea the fourth largest foreign investor, after Singapore, Taiwan and Japan, according to the Korea Trade-Investment Promotion Agency.
Experts say that the two nations have great potential for economic exchanges because Korea has technology, capital and know-how in economic development, while Vietnam offers natural and human resources.
Domestic companies such as Daewoo, POSCO, LG, Hyundai, Ssangyong and Hyosung have all succeeded in establishing firm footholds in Vietnam by efficiently mixing their developed technology with the country’s lower cost human resources.
The surge in bilateral trade would have been impossible without governmental and political support from Seoul and Hanoi.
Since the 2001 summit between former president Kim Dae-jung and president Luong, in which the two countries agreed to forge a comprehensive 21st century partnership, they have concluded a set of agreements to promote trade and investment, prevent double taxation, and increase cooperation in the airline and shipping sectors.
To increase tourism, Seoul and Hanoi signed an accord on working closely to establish tourism offices in each country and fostering exchanges of people.
Over 130,000 Koreans visit Vietnam each year, while 12,000 Vietnamese are visiting South Korea each year. A Vietnamese government policy allowing Korean visitors to enter the country without visas has supported the expansion of tourism.
The rapid strengthening of ties between the two countries is due to several factors: the economic structure that mutually benefits both sides, Vietnam’s growth potential; and the similar cultural experiences that the two share.
Partly because of Korean participation in the war with the US, Koreans have a high awareness of Vietnam. On the other side, a wave of Korean cultural influence that has hit Vietnam through imported television dramas has given Vietnamese young people favourable views toward South Korea in general.
“After Vietnamese saw Korean dramas such as ‘The Glass Shoes,’ they began to consider Korea as a brother-nation,” says a Vietnamese government official.
As he suggests, Vietnam has come to regard Korea as a role model in both economic and cultural development.
A concert to activate Korea-Vietnam cultural exchanges is planned this December, creating the likelihood that the two nations will further strengthen their cultural bonds.
The two countries similar conservative family structures make them feel close to each other, as do their similar historical backgrounds of guarding the nation against outside forces.
Although it has been one of the few countries to enjoy diplomatic relations with North Korea over the past half century, Vietnam recently has also backed South Korea’s policy of engaging the North.
Officials say Vietnam believes such a policy will contribute in inducing the isolationist North to enter the international community, and that the Hanoi government also hopes to assist in peacefully resolving the tension on the Korean Peninsula.
Because Vietnam was a Cold War ally of North Korea, the North can learn a lesson from both Vietnam and China in that both countries are successfully pursuing an economic open-door policy without making any radical changes in their political systems.
The fact that North Korea recognises Vietnam as a model in developing its economy makes South Korea’s relationship with Vietnam even more important, because Vietnam could help breaking down barriers with the North.
Thus, international experts have been urging the two nations to continue jointly developing their relationship to foster peace and prosperity in the peninsula and the region.
“Although Korea and Vietnam established diplomatic ties only recently, Korea is one of our most loved countries,” said Vietnam National Assembly Secretary general Bui Minh Thu in an interview with Korea’s Yonhap News Agency. Thu said he expects President Roh to see that Vietnam acknowledges Korea as its most important collaborator.
“I hope this summit will strengthen the bond between the two nations, which has been developing more rapidly since prime minister Phan Van Khai’s visit to Seoul last September,” Thu said.
During the summit, Korea hopes to reach an agreement with Vietnam regarding a reduction of income tax rates for Korean companies. Also, Korea will push forward plans to build up new industrial sectors in Vietnam, such as mobile communications and information-technology.
Vietnam, on the other hand, is expected to ask for a change in the current adverse balance of the trade. Yoo Tae-hyun, Korean Ambassador to Vietnam, said that Korea must consider importing more Vietnamese agricultural products in order to improve the two nations’ trade flow.
“Of course our domestic agricultural industry must not be harmed. But importing more of Vietnam’s goods is the only way to expand the trade between the two states,” he said. “Korea must concentrate on gaining the full advantage from this summit by presenting long-term plans to strengthen the economic relationship with Vietnam.”

 

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