[Viewpoint] Vietnam-Korea cooperation: a win-win

Vietnam is among the world’s most promising emerging markets, with a population of 86 million, an area 1.5 times the size of the Korean Peninsula, and rich mineral resources.

Judging from its recent economic performance, the Vietnamese economy is showing great potential to lead Southeast Asia in the years to come.

Despite numerous invasions by foreign powers, the country has maintained its national sovereignty and integrity. The traditional Vietnamese emphasis on education has worked to enrich the country’s human resources. Although a socialist state, Vietnam shares a good number of Asian values with Korea, based on the country’s long traditions of Buddhism and Confucianism. After a short period of hostility following the Vietnam War, Korea established diplomatic ties with Vietnam in 1992.

Since then, trade and investment between the two counties have increased rapidly, leading to a significant economic partnership.

In 1986, Vietnam opened its economy and introduced market principles through the implementation of the doi moi or “renovation” policy. Vietnam’s economy has since been the second fastest growing in the world, behind only China, expanding at an annual average of nearly 8 percent, with the exception of a short break during the Asian financial crisis.

Recently, Vietnam has accelerated its market opening reforms. Since becoming the seventh member of Asean in 1995, Vietnam has been actively involved in the integration movement to form a regional economic bloc in Southeast Asia. Vietnam even concluded a trade agreement with the United States, its erstwhile wartime enemy.

After the trade pact went into effect in 2001, the United States granted permanent normal trade relations status to Vietnam in 2006. In January 2007, Vietnam became a WTO member, becoming officially integrated into the global economic system.

With a GDP per capita approaching $1,060, a feat that came along with Vietnam’s development from a poor, low-income country into a dynamic new economy, it is now participating in global efforts to combat the ongoing global economic downturn.

At the same time, Vietnam is aggressively pursuing economic development policies, such as the development of social overhead capital and human and mineral resources.

Rich in coal, minerals, agricultural products and offshore oil and with a talented labor force, Vietnam is benefiting from its government’s strong commitment to putting into place a consistent outward-looking development policy.

The goal: to become an emerging economic hub on the Indochinese Peninsula. And it’s one that has attracted the interest of many world-renowned multinational corporations.

Recently Vietnam has become one of the most important destinations for Korean companies’ outbound foreign direct investment. The Korean economy, which developed through outward-looking industrialization policies following the war, has been recognized as an effective role model for Vietnam in its efforts to design a 21st-century development model.

From a Korean perspective, Vietnam is a very important partner with great potential as an overseas source of natural resources and in the quest for East Asian regional integration. The Lee Myung-bak administration is promoting a foreign policy based on soft power, thus seeking to increase official development assistance and share Korea’s experience with countries around the world that are in the process of rising in prominence. In this respect, increasing the pace of economic cooperation between Vietnam and Korea is certain to be a win-win for both countries in both the short and long run.

On Oct. 21 and 22 in Hanoi, an Economic Development Forum, part of Vietnam-Korea Week, consisting of a variety of collaborative programs, will provide an excellent opportunity for high-ranking government officials, members of the business community and opinion leaders of the two countries to meet and discuss in detail comprehensive cooperation programs in various fields such as culture, education and development of human resources, in addition to macroeconomic development strategies.

The event is likely to cement existing bilateral relations between the two states, leading to a more strategic partnership.

In particular, Korea’s experience in e-government, large-scale SOC construction projects overseas and pursuing globalization, including its multitrack negotiations for FTAs, may provide Vietnam with management assistance as well as several models to benchmark, which will assist the country on its path to further development.

Right after the Asian financial crisis of 1997-98, Korea proposed an initiative called “A Vision of an East Asian Community” within the Asean plus China, Japan and Korea framework.

Indeed, Asean Plus Three countries have made significant progress in concluding three separate FTAs - Asean with China, with Japan, and with Korea.

Given Vietnam’s strategic location and future potential, it too may eventually enter into FTA negotiations with Korea in order to optimize opportunities above and beyond those created by the existing Asean-Korea FTA. Moreover, the enhanced partnership between the two countries should be perceived as a true success story that proves how two countries can benefit together and achieve their respective development goals.

Combining lessons learned from Korea’s “miracle on the Han River” with those from Vietnam’s rapidly emerging “miracle on the Mekong River” in the not-too-distant future, our two countries are likely to realize mutual benefits, thus contributing to the laying down of an important foundation for East Asian economic integration.

*The writer is the chair professor in the GSIS at Chung-Ang University and the foreign investment ombudsman for Kotra.

by Ahn Choong-yong