Vietnam's biggest trade deficit is with South Korea

A report of the General Statistics Office (GSO) shows a significant increase in Vietnam’s exports to South Korea in the first four months of the year, reaching $4.4 billion, an increase of 32 percent compared with the same period last year.



However, imports from South Korea increased even more sharply by 45.3 percent with import turnover of $13.7 billion. This means the excess of imports over exports in trade with South Korea has reached 9.3 billion.

Previously, Vietnam's biggest trade deficit was with China. Chinese and South Korean markets alone have brought the trade deficit up to $18.3 billion.

Vietnam mostly exported to South Korea phone and phone components (33 percent), computer and computer components (up by 59.4 percent), machines & equipment (64.3 percent) and textile & garment products (16.7 percent).

It imported machines & equipment, instruments, computers, electronics, petroleum, phones and plastics.

Dau Tu quoted Deputy Minister of Industry & Trade Tran Quoc Khanh as saying that Vietnam mostly imports from South Korea products that serve domestic production and outsourcing for exporting.

Following Samsung, more and more South Korean investors have flocked to Vietnam. By April 2017, South Korea had registered $54 billion worth of foreign direct investment in Vietnam, topping the list of foreign investors in Vietnam, far outstripping the second biggest foreign investor – Japan.

The presence of many South Korean investors in Vietnam has led to an increase in imports of machines & equipment for domestic production. This explains the sharp increase in imports from South Korea.

Nguoi Lao Dong quoted Vu Thanh Tu Anh, an economist, as reporting that in order to make up 20 percent of Vietnam’s export turnover, Samsung needs to import a large volume of input materials, components and accessories from other countries, including South Korea.

This showed that Vietnam not only heavily relies on the foreign-invested economic sector, but also saw the trade deficit increasing after the FTAs (free trade agreements) with the markets took effect.

Vietnam, for example, saw its trade deficit with Thailand and Malaysia increasing once the FTAs with the markets took effect.

Dat Viet quoted a report as showing that the trade deficit with South Korea has been increasing very rapidly. In 2008, the trade deficit was $6.27 billion. The figure rose to $8.46 billion in 2011 and then to $20.6 billion in 2016.

Dinh Trong Thinh from the Finance Academy said that in trade relations, the deficit is always a worrying problem.

Thanh Lich / vietnamnet