S. Korea advances in investment rankings

Vietnam's continued large trade deficit with South Korea has mirrored a climb in South Korean investment in the other direction.

- By Nguyen Dat

According to figures released last week by the National Statistics Office under the Ministry of Finance, South Korea is now Vietnam's third-largest trade partner after China and the US.

The Vietnam-South Korea trade turnover in the first three months of this year reached $26.8 billion, up from $20.7 billion in the corresponding period last year. This included $8.1 billion worth of Vietnamese exports, up 19.6 per cent, and $18.7 billion for South Korean exports, up 34.5 per cent.

The total trade deficit for Vietnam in the period sat at $10.6 billion, up from $7.1 billion in the same period last year.

Vietnam has for many years suffered from a trade deficit with South Korea (see chart). However, according to the Vietnamese Ministry of Industry and Trade (MoIT), the country remains an attractive destination for South Korean investors, who often import assorted materials for production from their home market into Vietnam, where such materials cannot be produced directly due to a weaker supporting industry.

Last year, both nations' total trade turnover reached $89.4 billion. Vietnam's exports to South Korea hit $28.9 billion, accounting for 6 per cent of the former's total export turnover ($475 billion). Meanwhile, Vietnam's imports from South Korea stood at $60.5 billion, occupying 13.3 per cent of Vietnam's total import value ($455 billion).

The key item groups that were imported most from South Korea includes computers and electronics, machinery and equipment, assorted petrol and oil, plastic materials, metals and steel, automobile spare parts, and mobile phone and related spare parts. All these figures recorded an on-year increase.

These imported items do not compete with those in Vietnam, where many of similar items are not produced, and they are all used for domestic production in Vietnam, according to the MoIT.