According to a spokesperson for the ministry’s Foreign Investment Agency, it is expected to fuel expanded economic cooperation and commercial and services trade between the two nations.
“The governments of the two nations agreed on the accelerated effective date through diplomatic channels, with both sides wanting the accord to come into force as soon as practical,” said the spokesman.
He said it took over two and one-half years to negotiate the final deal, which was signed earlier this year, with the RoK’s National Assembly ratification coming on November 30.
"With the deal given effect prior to the end of the year, companies from the two trading partners can start benefitting from tariff cuts yet this year" the spokesman said.
He continued on to say that under the deal, tariff reductions would be reduced to zero on substantially all trade line items and phased in over the next few years at the beginning of each year.
“So January 1, 2016 will mark the start of the ‘second year’ of rate cuts,” said the spokesperson.
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Once the agreement is in place, it will become easier for domestic companies to do business in each other’s country.
Seoul has agreed to open 94.7% of its market, while corresponding figures for Hanoi will reach 92.4%.
"It is also anticipated that the trade pact will create a more stable business and investment environment," he said.
“This is important because Vietnam is the RoK’s third-largest export market after China and the US.”
“Meanwhile, businesses headquartered in the RoK collectively represent the largest foreign investment group in Vietnam.”
He said besides textiles and car parts, the trade deal will open the Vietnam market up to a host of RoK consumer goods including electronics and even cosmetics, providing more export opportunities for small Korean businesses.
The pact will, moreover, will allow greater access to Vietnam's service sector and allow for freer flow of workers across the nations border.
Park Sang Hyup, head of the Korea Trade-Investment Promotion Agency (KOTRA) in Ho Chi Minh City, said the agreement paves the way for Samsung to develop its supply chain in Vietnam with companies from the RoK.
Hyup said he is aware of at least 40 electronic components manufacturers from the RoK that plan to set up shops in Vietnam to supply Samsung Electronics plants in the Yen Phong Industrial Park in the northern province of Bac Ninh.
