Thayer Consultancy Background Briefing:

ABN # 65 648 097 123

South Korea’s President to
Visit Vietnam
Carlyle A. Thayer
October 20, 2009

[client name deleted]

I am writing you to seek your comments on South Korean President Lee's upcoming visit to
Vietnam next week (October 20-22).
Q1- As you know, during this trip, Vietnam and South Korea plan to announce the upgrade of
their bilateral relations from "comprehensive partnership" to "strategic cooperation
partnership". Why does Vietnam choose South Korea to become its fifth strategic partner
besides China, Japan, India and Russia?
ANSWER: Although Vietnam used the term strategic partner many years ago to describe its
relations with Russia and India, this term has come back into vogue recently. Basically a
strategic partner is a state that has all round relations with Vietnam that are particularly
important. South Korea is one of Vietnam’s major trading partners with two-way trade
estimated at around U.S. ten billion dollars. South Korea has significant investments in
Vietnam totaling over U.S. sixteen billion. Both countries host sizeable communities of each
other’s citizens. In recognition that the bilateral relationship is important by most measures,
the upgrading of the characterization from ‘comprehensive partnership’ to ‘strategic
cooperation partnership’ indicates that leaders on both sides expect the relationship to
develop further in coming years. The economic, political and cultural and security dimensions
will grow in importance.
Q2- What do you think of the significance of this move to the bilateral relationship between
Vietnam and South Korea, particularly the bilateral trade and investment ties? (What would be
new opportunities brought about by this new partnership relations to two countries'
enterprises?)
ANSWER: Vietnam has a large trade imbalance with South Korea of U.S. five billion or more.
Measures need to be adopted to offset this deficit particularly because South Korea is a 2007
signatory of a Free Trade Agreement with ASEAN of which Vietnam is a member. It is unlikely
that Vietnam can sell much more to South Korea even though the visit of President Lee
Myung-bak will set the scene for a package of economic deals. In the longer run, Vietnam is
angling for South Korea to invest heavily in infrastructure projects, industrial enterprises and
natural resource development and thereby assist Vietnam in attaining its goal of becoming a
modern and industrialized country by 2020.
On the strategic plane, South Korea will host the next G-20 summit and Vietnam will become
chair of ASEAN for 2010. Both sides have much in common in recovering from the global
financial crisis. An exchange of views by the two presidents will lead to increased awareness
of the concerns of the other partner. Vietnam will lobby South Korea to convey the special
needs of developing countries to the more advanced economies.