According to a representative from the Ministry of Industry and Trade (MOIT), the VKFTA, which comprises 17 charters, 208 articles, 15 appendixes and an agreement on the pact’s implementation, was officially inked by the two governments and is in the process of being ratified in each country.
Pham Khac Tuyen, head of the North East Asian Division, the MOIT’s Department of Asia Pacific Markets stressed that the RoK would offer further opportunities for Vietnamese exporters in the newly signed pact compared to the ASEAN-RoK FTA as many products from Vietnam would become tariff-free.
Vietnam can access goods, particularly materials for key export sectors such as textiles, garments, footwear and electronics, from the RoK at cheap prices, helping to reduce reliance on imports from other sources, Tuyen said.
The pact will support Vietnam in forming a more transparent business environment to attract further investment from the RoK and other countries, he added.
Experts said that the pact’s challenges to Vietnamese businesses’ competitiveness in the local market are not worrying, though in services and investment the businesses could face challenges as the VKFTA includes more regulations on services and investment from the RoK than those committed in the ASEAN-RoK FTA.
According to Tran Ngoc Liem, Vice Director of the Ho Chi Minh City branch of the Vietnam Chamber of Commerce and Industry, the pact’s challenges will impact Vietnamese businesses, forcing them to improve integration and increase competitiveness before facing greater challenges posed by other FTAs in the future.
Two-way trade between Vietnam and the RoK has grown rapidly from US$500 million in 1992 to US$26 billion in 2014 at an average annual growth rate of 20%. The RoK has always been an important partner of Vietnam, ranking third among the ten most important trade partners of the country, while being the fifth largest export market and the second biggest import market of Vietnam. The RoK is also the biggest investor in Vietnam with 505 newly-licensed projects and 179 capital-added projects worth US$7.32 billion, accounting for 36.2% of the total investment in the country.
