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International Relations

South Korea's Moon visits Vietnam to deepen economic ties

Seoul eyes exports to ASEAN amid US protectionism and Chinese boycotts

A Samsung Electronics plant in Bac Ninh Province, northern Vietnam.

SEOUL -- South Korean President Moon Jae-in embarks on a three-day state visit to Vietnam on Thursday to strengthen economic ties with the rising Southeast Asian power, as Seoul struggles to deal with its two largest trade partners, China and the U.S.

Moon will have a summit with Vietnamese President Tran Dai Quang in Hanoi on Friday and meet other leaders during his visit. The South Korean leader will also attend a forum for business leaders of the two countries alongside Samsung Electronics Vice Chairman Yoon Boo-keun and Chung Yong-jin, vice chairman of retail group Shinsegae.

"I hope our two nations will be able to respond effectively to the fourth industrial revolution, one of the most-talked-about issues across the globe, and create future growth engines together," said Moon in an interview with Vietnam's Nhan Dan Newspaper in Seoul. 

Economists say there are plenty of sectors where the two countries can cooperate, including energy, which Vietnam is eager to develop. Electricity demand in Vietnam is expected to grow 10.7% annually by 2020, driven by urbanization and industrialization, according to the Vietnamese government.

"In economic cooperation between the two countries, South Korea should find projects that Vietnam needs," said Jeong Kwi-il, a researcher at the Institute for International Trade in Seoul. "We forecast electricity generation, renewable energy, smart cities and engineering education will be promising areas, because they are sustainable and have more chances to succeed."

The visit comes as South Korean corporations are eyeing the ASEAN region as an alternative market to China, where they have been hit by boycotts over Seoul's deployment of a U.S. missile defense system last year. Samsung is expanding its presence in Vietnam with more investments in display screens and smartphones, while Shinsegae is opening outlets of its discount chain E-Mart in Hanoi.

Asia's fourth-largest economy also faces obstacles in its trading with the U.S., as President Donald Trump takes a protectionist turn with moves like new tariffs on steel and aluminum. Washington has already triggered a three-year safeguard on washing machines, imposing 50% tariffs on all washers imported after the first 1.2 million units in the first year.

Vietnam was the third-largest export destination of South Korea last year, behind only China and the U.S, thanks to their free trade agreement effective since December 2015. South Korea's exports to Vietnam jumped 46.3% to $47.7 billion from a year earlier, while its imports from the country climbed 20.8% to $16.1 billion.

The presidential Blue House said Vietnam will play the role of a bridge connecting South Korea to other members of the Association of Southeast Asian Nations. Moon has been pushing his so-called New Southern Policy, a diplomatic agenda which seeks to strengthen Seoul's relations with ASEAN nations and reduce its reliance on the U.S. and China.

"We expect this visit to Vietnam to put our New Southern Policy on the right track, as well as become an important stepping stone for diversifying our diplomacy," said presidential spokesman Kim Eui-kyeom in a briefing. "Vietnam has developed as our top trading partner and investment destination [in ASEAN], although it has been just 25 years since we established diplomatic relations. It is our key partner country in ASEAN," Kim said.

After Vietnam, Moon will travel to the United Arab Emirates on Saturday for a four-day visit. He will meet with Mohammed bin Zayed Al Nahyan, crown prince of Abu Dhabi, on Sunday, aiming to elevate the two countries' relations to a "special strategic partnership."

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