Vietnam Looks to Secure Free Trade Agreement with South Korea

September 10, 2013 Posted by Vietnam Briefing Reading Time: 2 minutes

Sept. 10 – Vietnamese President Truong Tan Sang met with South Korean President Park Geun-hye on Monday to further discuss a proposed free trade agreement and the strengthening of cooperation in nuclear power and industrial technology.

Park’s trip marked her first to a Southeast Asian country, and only her third international trip, signifying the importance that she places on South Korea’s relationship with Vietnam.

Trade between the two countries has seen a massive increase since the two sides opened diplomatic relations in 1992, growing from US$500 million to US$21.6 billion last year. Korea is also one of Vietnam’s largest foreign investors with total registered capital of nearly US$26 billion.

The free trade agreement is scheduled to go into effect next year and aims to increase trade between the two countries to US$70 billion by 2020.

Another reason for President Park’s visit was to formalize the country’s participation in Vietnam’s planned construction of nuclear power plants. Vietnam is planning to construct 10 plants by 2030 with South Korea hoping to take part in building two of them. The two reactor projects would be worth around US$10 billion.

“The project will ‘open up a new horizon’ in economic cooperation between the two countries,” stated President Park.

Other projects that South Korean firms are trying to win in Vietnam include a US$3.6 billion project for two coal-powered thermal power plants and a US$2.3 billion project to build thermal power plants.

As an added incentive for reaching an agreement, President Park suggested the implementation of a number of aid projects for Vietnam, such as a science and technology research institute known as V-KIST. V-KIST is modeled after the Korea Institute of Science and Technology.

Other potential projects include “a road linking the northern Vietnamese cities of Tan Van and Nhon Trach, joint research and development in parts industries and sharing South Korea’s expertise in logistics, agriculture and other sectors.”

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