South Korea’s President Yoon Suk Yeol and Vietnam’s President Vo Van Thuong agreed on Friday, June 23, 2023, to boost security cooperation, citing North Korea’s nuclear threat, and committed to increasing bilateral trade and investment despite a slump this year and Vietnam’s planned tax hikes on large firms.
During a joint press conference at the meeting at the Presidential Palace in Hanoi-Vietnam, South Korean leader Yoon Suk Yeol acknowledged economic woes but reiterated Vietnam’s key role in Seoul’s growth strategy.
He signed 17 bilateral agreements with Vietnam’s President Vo Van Thuong on a series of issues, from critical minerals to Vietnamese workers in Korea, and said Seoul would step up cooperation with Vietnam against North Korea’s nuclear threat. Vietnam “is ready to participate in the process of denuclearization of the Korean peninsula.
The two countries agreed to boost defence industry relations as well as security cooperation in the South China Sea, and South Korea is among the countries discussing feasible arms sales to Vietnam since it seeks to modernise its arsenal.
Yoon Suk and Van Thuong reiterated a goal of boosting bilateral trade, despite a fall so far this year driven by lower global demand for smartphones and other electronic goods that Korean firms assemble in Vietnam with many components shipped from Korea.
‘’Bilateral trade has fallen by a quarter in the first five months of this year compared to the same period in 2022, with a nearly 30% drop in Vietnamese imports of South Korean products,” Yoon Suk said.
Korean firms also signed over 100 agreements with Vietnamese counterparts during the state visit on energy, aviation, shipbuilding, and research. Thus, South Korean companies are among the main investors in Vietnam’s nascent Liquefied Natural Gas (LNG) industry, which is expected to boost the country’s electricity output and battle shortages that saw power cuts in Northern provinces where South Korean manufacturers operate.
Vietnam, on the other hand, is set to introduce, starting next year, a new tax on large corporations, including big Korean multinationals, as part of a global reform of tax rules that could reduce Vietnam’s appeal as a manufacturing hub.
