Recently, Vietnam’s Government has issued Decree No. 149/2017/ND-CP and Decree No. 157/2017/ND-CP on Vietnam's Preferential Import Tariffs for the implementation of the Vietnam-Korea Free Trade Agreement (VKFTA) and the ASEAN-Korea Free Trade Area (AKFTA) in the 2018-2022 period.
Accordingly, more than 700 tariff lines applicable for goods imported from Korean will be adjusted to zero per cent in 2018.
Imported goods subject to new import tariffs mainly are seafood, wheat, confectionary products, diesel fuel, jet fuel, paint, laundry detergent, iron and steel products, electrical machinery, and electronics.
Pham Tuan Anh, Deputy Head of the International Cooperation Department under the Ministry of Finance (MoF) said that basically most of the goods codes listed in the tariff did not change compared to Decree 131/2016/ND-CP. Therefore, there is no impact on the implementation of commitments under the VKFTA.
KOTRA’s official said that the two Decrees will continue to promote trade and investment between the two countries in the coming period through cutting import tax levied on lots of items.
Vietnamese and Korean businesses will be able to exploit the trade and investment incentives that the two countries have given each other, further strengthening the bilateral cooperation on trade and investment.
After two-year validity of VKFTA, the bilateral economic cooperation between Vietnam and Korea has made positive and strong progress. Vietnam is considered an open market for Korean businesses.
Korea is currently one of Vietnam's largest trading partners with a total registered capital of more than US$57 billion, leading the countries and territories which have effective investment projects in Vietnam.
In particular, Korea's registered capital accounted for 23.7 per cent of total FDI capital in Vietnam, ranking second after Japan in 2017.
Korean companies namely Samsung, LG, Hyundai, Lotte, Daewoo…are primarily interested in investing in sectors of processing, manufacturing, real estate, construction, storage, wholesale and retail, car and motorcycle repair.
In addition, according to the General Statistics Office of Vietnam (GSO), export turnover between Vietnam and Korea has increased strongly in recent years.
Total import-export turnover in 2017 was about USD 61.8 billion, 9.4 times higher than that in 2007. Since the application of FTA, bilateral trade has increased continuously, making Vietnam become Korea's fourth largest trading partner.
Korea's exports to Vietnam last year reached nearly US$47 billion, mainly including semiconductor devices, monitors, wireless communication equipment and electronic components; Vietnam’s exports reached US$15 billion, up 31.1 per cent over last year, mostly including wireless communication devices, clothing and daily necessities.
Currently, Korea's market share in Vietnam accounts for 22.3 per cent, ranking second after China’s one. The investment environment has been increasingly improved, creating a motive force for Korean enterprises in particular and other countries in the world to invest in Vietnam.
Vietnam is a country with stable economic and political status and with high economic growth rate. Vietnam’s labor force is cheap and abundant with about 60 per cent of the population at working age. Infrastructure is increasingly invested and upgraded. The Government of Vietnam has also made great strides in creating a favorable and transparent investment environment through a variety of policies, including the cutting of sub-licenses and cumbersome administrative procedures.
Furthermore, the deepening participation in new-generation FTAs with commitments to sharp tax reduction, protection of intellectual property, etc., helps Vietnam form a "magnet" that attracts investment strongly.
With the reduction of import tax on Korean goods to zero per cent, 2018 year promises to continue to record positive growth in Korean investment into Vietnam as well as two-way trade turnover between the two countries.