South Korea and Vietnam have just signed a new agreement, committing to expanding economic and technological cooperation between the two countries. This relationship gains new momentum amid a global scenario marked by trade tensions, particularly regarding tariffs imposed by the United States. The two countries are now seeking to strengthen their production chains, expanding mutual investment, and establishing a strategic partnership for the next decade.
South Korea-Vietnam partnership strengthened to overcome challenges from US tariffs
South Korea and Vietnam’s leaders pledged to deepen economic cooperation on Monday as their export-dependent countries try to shore up longstanding supply chains as U.S. President Donald Trump’s tariffs shake up global trade. There was no public discussion of the levies – 15% on South Korean products going to the U.S. and 20% for Vietnamese goods – as South Korean President Lee Jae Myung hosted Vietnam’s To Lam as his first state guest since taking office in June.
But Trump’s tariffs on products from Asian countries have increased uncertainty over future business commitments, with Vietnamese official data showing a slowdown in new investment. Lam, the Vietnamese Communist Party general secretary, said they agreed to expand trade with each other to $150 billion by 2030 – from about $86.8 billion in 2024 – and that Vietnam welcomed an increase in investment by South Korean businesses.
“Our countries agreed that about 10,000 Korean companies operating in Vietnam contribute to Vietnam’s economic development and mutually beneficial cooperation between the two countries,” Lee said in a televised address.
Lam led a delegation of industry, trade, foreign and technology ministers and senior party and parliament members on the four-day state visit. The countries signed 10 memoranda of understanding, pledging cooperation in areas including nuclear and renewable energy, monetary and financial policies, and science and technology, Lee’s office said.
Cooperation in infrastructure and technological innovation is expanded by new agreements
This new cooperation has expanded across several fronts, including infrastructure, nuclear energy, and financial policies, but the most prominent focus has been infrastructure, with a focus on projects like high-speed rail that promise to further integrate the two countries’ markets. Some leaders from both countries have also emphasized the importance of joint investment in strategic sectors to avoid fragmenting supply chains, especially in emerging markets.
Other agreements covered cooperation in infrastructure, including high-speed rail, Lee’s office said. In a speech at South Korea’s Yonsei University, Lam urged South Korean companies to keep investing in Vietnam and warned of the risk of fragmenting supply chains. “Vietnam welcomes South Korean enterprises to expand their investments in the country, emphasising substantive cooperation in technology,” Lam said.
Lam said the countries should make it a top priority to jointly develop semiconductors and make breakthroughs in new materials, calling on Korea to keep nurturing Vietnamese talent in areas like AI, biotech and shipbuilding.
Innovation in Vietnam will increase thanks to South Korean investments
A number of major South Korean companies including Samsung Electronics have used Vietnam as an export hub, benefiting for years from lower labour costs, generous tax incentives and Hanoi’s numerous free trade pacts with dozens of countries. South Korean companies have been cited as potential investors in Vietnam’s planned nuclear energy, LNG power plants and high-speed rail projects.
The future of the industry depends on strategic partnerships
South Korean companies establishing a presence in Vietnam is a positive sign of the potential for bilateral cooperation. The sectors that benefit most are those that combine advanced technology and innovation, such as the joint development of semiconductors.
Looking ahead, both countries can build a solid foundation for economic, technological, and industrial cooperation by investing in talent development to maintain their competitiveness and ensure more sustainable development in Asian countries.
GCN.com/Reuters