Vietnam’s maintenance of a large trade deficit with South Korea bears a positive meaning as the Southeast Asian country has mainly imported machinery and materials for local production, said an official from the Vietnamese Ministry of Industry and Trade.

South Korea is the third-largest trade partner and import market for Vietnam, following China and the U.S., Do Quoc Hung, deputy head of the Asia-Africa Market Department under the Ministry of Industry and Trade, told Tuoi Tre (Youth) newspaper.

Vietnam incurred the second-largest trade deficit with South Korea last year, after China, Hung added.

Vietnam exported US$24.3 billion worth of products to the Northeast Asian country in 2022 and maintained the trade deficit at $37.8 billion.

The main exports of each country showed little direct competition.

Vietnam has strengths in agro-fishery products, processed food, textiles-garments, footwear, and wooden products.

Meanwhile, South Korea is the second-largest supplier of accessories, machines, equipment, and materials to Vietnam.

Nevertheless, Vietnam should balance the bilateral trade in the long term by applying various measures to facilitate and support Vietnamese enterprises to access the South Korean market in a diversified and effective manner, Hung noted.

However, the global economy has shown slow recovery after the COVID-19 pandemic, high inflation, a falling demand for goods, and tightened monetary policies in many countries have hit Vietnam’s import and export activities, according to the Ministry of Industry and Trade.

South Korea is the largest foreign investor in Vietnam and its enterprises making investments in the Southeast Asian country account for a large proportion in the country’s exports to the world.

As a result, trade between Vietnam and South Korea may not grow significantly this year, Hung forecast.

South Korea is imposing trade remedies on some of Vietnam's exports, including gas lighters, Ferro-Silico-Manganese alloy, plywood, and copper pipes.

The Northeast Asian country is also applying anti-dumping measures against Vietnam’s plywood, Ferro-Silico-Manganese alloy, and copper pipes.

Hung added that the connectivity between Vietnamese and South Korean-invested enterprises remains loose, resulting in domestic firms’ difficulties in taking advantage of opportunities to access technology, modern, and effective production governance solutions, as well as join supply chains.

Therefore, Vietnam should continue making conditions favorable for the two sides to expand their trade value, focusing on agro-fishery products and processed food, encouraging South Korean enterprises to invest in Vietnam, and supporting Vietnamese firms to deeply take part in supply chains.

Like us on Facebook or  follow us on Twitter to get the latest news about Vietnam!