'30th Anniversary of Diplomatic Relations' Vietnam Emerges as South Korea's Largest Trade Surplus Partner

Vietnam Maintains Trade Surplus Over 30 Years of Diplomatic Relations
Grows into One of the Top 3 Trading Partners

Vietnam's Main Export Item is 'Semiconductors'
"Bilateral Trade Volume Should Be Increased to $150 Billion"

[Asia Economy Reporter Kim Pyeonghwa] Vietnam, which elevated its cooperative relationship with South Korea this year to mark the 30th anniversary of diplomatic ties, is expected to become the country with the largest trade surplus this year. Along with this, there is also a claim that the trade volume between the two countries should be increased to $150 billion by 2030, given the significant economic cooperation synergy between them.

On the 21st, the Federation of Korean Industries announced the changes in trade and investment between South Korea and Vietnam over the past 30 years since 1992, as well as the achievements of domestic companies in Vietnam and areas for expanding economic cooperation, in celebration of the 30th anniversary of Korea-Vietnam diplomatic relations.

Vietnam Forecasted to be the Top Trade Surplus Country This Year

South Korea has maintained a trade surplus with Vietnam since recording a $300 million surplus in the year diplomatic ties were established, 1992. The cumulative trade surplus with Vietnam up to November this year amounts to $308.8 billion. This is comparable to the combined sales of South Korea’s leading electronics companies Samsung Electronics ($244.1 billion) and LG Electronics ($65.2 billion) last year, totaling $309.3 billion.

In particular, despite the COVID-19 pandemic last year, the trade surplus reached a record high of $32.7 billion since diplomatic relations began, making Vietnam the second-largest trade surplus partner after Hong Kong ($35.3 billion). This year, from January to last month, Vietnam ($31.3 billion) has surpassed the United States ($25.4 billion) in South Korea’s trade surplus, and including this month, it is expected to become the top trade surplus country this year.

The trade volume between the two countries grew from $500 million in the year diplomatic ties were established to $80.7 billion last year, a 161-fold increase. Compared to Japan-Vietnam trade volume, which increased 31.8 times from $1.3 billion to $42 billion during the same period, this is a remarkable figure. Vietnam currently accounts for 8.8% of South Korea’s exports and 3.9% of imports in foreign trade. It is expected to rank as the third-largest trading partner of South Korea this year.

In this regard, Vietnamese President Nguyen Xuan Phuc visited South Korea this month and stated, "We plan to increase the trade volume between the two countries to $100 billion by next year and $150 billion by 2030," he announced.

Semiconductor Exports to Vietnam Increased by 32%

The top cumulative export items since the establishment of diplomatic relations between South Korea and Vietnam are ▲semiconductors ▲flat panel displays and sensors ▲wireless communication devices, in that order. At the time diplomatic ties were established, petroleum products and compound fertilizers were the main export items, but as the economies of both countries developed, the export items gradually shifted to advanced products. In particular, semiconductors recorded a 32.0% export growth rate from 2019 to last year.

Conversely, the top cumulative import items are in order ▲wireless communication devices ▲clothing ▲personal accessories ▲computers ▲flat panel displays and sensors. Clothing has consistently been among the top imported items since diplomatic relations began. At the time diplomatic ties were established, coal, clothing, and mollusks were the main import items.

Foreign investment in Vietnam by South Korea recorded 9,203 cases totaling $78.5 billion as of last year, ranking first in both the number of investments and investment amount. It far surpassed the second and third countries, Singapore (2,827 cases, $66.9 billion) and Japan (4,793 cases, $64.3 billion). South Korea’s overseas direct investment (FDI) in Vietnam increased significantly from $17 million in the year diplomatic ties were established to $2.4 billion last year.

Samsung is identified as the largest foreign direct investment company in Vietnam’s history. This year, Samsung’s cumulative investment in Vietnam is expected to reach $20 billion. LG Electronics plans to invest an additional $4 billion in Vietnam this year to expand smartphone component production. The Federation of Korean Industries explained that domestic companies’ investment expansion in Vietnam is expected to continue in the future.

Cooperative Relationship Elevated... Trade Volume Expected to Reach $150 Billion

This year, the Korea-Vietnam relationship was elevated from a ‘strategic cooperative partner’ to a ‘comprehensive strategic cooperative partner.’ The two countries plan to strengthen their partnership for joint development in various fields going forward. Vietnam’s comprehensive strategic partnership is the highest level of external cooperation, and only countries such as China, Russia, and India, including South Korea, belong to this category.

As allied countries, the domestic business community expects to enhance economic cooperation with Vietnam and collaborate in the defense industry as well. Kim Bongman, head of the Federation of Korean Industries’ International Headquarters, said, “Just like the Park Hang-seo magic that developed Vietnamese football, the Korea-Vietnam economic relationship over 30 years has achieved remarkable progress worthy of being called magic,” adding, “The Korean business community will strive to continue this momentum and increase the trade volume between the two countries to $150 billion by 2030, double the current level.”

This content was produced with the assistance of AI translation services.