The Hanoitimes - The utilization rate of preferential treatment from Vietnam - Korea Free Trade Agreement (VKFTA) of Vietnam has come to saturation point at some sectors, requiring new methods to bring long-term benefits for enterprises of two countries.
After 3 years since the effective date, VKFTA has played vital part in improving trade relation between Vietnam and Korea, said representative of the Ministry of Industry & Trade at forum on utilization of VKFTA.
In 2015, Vietnam's export turnover to Korea applying preferential certificate of origin (C/O) reached US$5.75 billion, which has increased to US$7.62 billion in 2017. Specifically, garment is subject to have the highest rate of preferential C/O, followed by fisheries, wooden products, footwear with utilization rate of 31%, 10%, 7%, and 5% in 2017.
Samsung has invested over US$17 billion in Vietnam.
As at present, the rate of utilizing preferential treatment from VKFTA in Vietnam's export has been slowing down, said Le An Hai, Deputy Director of MoIT's Department of Asia and Africa Markets.
Certificate of origin is an important instrument so that enterprises can take advantage of the FTA, which requires Vietnam to have an efficient system to manage and issue C/O, said Hansung Kim at the Ajou University.
"Vietnam and Korea should cooperate to set up synchronized C/O issuance system, so that Vietnamese enterprises can utilize preferential treatments under VKFTA efficiently," Kim said.
Bilateral trade between Vietnam and South Korea now surges 117 times to US$58.5 billion compared with 1992 when the two countries established the bilateral ties, said Hai.
Korea's exports to Vietnam accelerated to US$48 billion last year, the Korean International Trade Association (KITA) reported, adding that the rise is impressive as it accounted for 8.3% of Korea's total export value, much higher than the 3.9% rate three year ago.
Korea currently is the largest among 126 countries and territories investing in Vietnam, for which the trend is expected to continue growing in the coming time, said the Ministry of Planning & Investment (MPI).
As at present, Vietnam has attracted US$319.9 billions of registered foreign direct investment (FDI), in which Korean investors accounted for US$59 billion, or 18.4% of total FDI to Vietnam, according to FIA's statistics.
In the first quarter of 2018, the country has attracted US$5.8 billions of FDI, with US$1.84 billions from Korea, accounting for 31.6% of total investment. Following this result, Korea is the largest investor among 76 countries and territories investing in Vietnam for the first three months of 2018.
Not only leading the list of top investors in Vietnam, a number of Korean's leading corporations such as Samsung, LG, Lotte, Hyosung, or Doosan chose Vietnam as an ideal place for investment.
In a period of 10 years, Samsung has increased its investment capital in Vietnam from US$670 million in 2008 to over US$17.3 billion in 2018, while LG has invested around US$2 billion in Vietnam since 1995. Recently, the corporation has increased over US$501 million for the LG Innitek Hai Phong to produce camera module.
Hyosung also invested US$3 billion in Vietnam, for which the number is expected to go up to US$6 billion in 2020.
In 2017, Vietnam's GDP reached 6.81%, exceeding the growth target of 6.7% set by the National Assembly. Recently, Vietnam also posted the country's strongest first-quarter growth in 10 years at 7.38%.
Under this context, international organizations such as the Asian Development Bank (ADB) or World Bank forecasted Vietnam's GDP growth will be in range of 6.5 - 6.7% in 2018.
Along with high economic growth, Vietnam's credit growth is expected to reach 17% in 2018, which is in equivalent with the rate of 18% in 2017.