HANOI, Vietnam - Jeong Man-ki, vice chairman of the Korea International Trade Association, stressed now is the time for South Korea and Vietnam to seek the next level of economic ties as the two nations face structural and geopolitical challenges in his keynote speech during the Korea-Vietnam Economic Cooperation Forum held in Hanoi, Vietnam, on Friday.

Under the title “Great Together, Next Prosperity 100,” Herald Corp., publisher of The Korea Herald and Herald Business, held the forum together with the KITA, as well as the Vietnam Chamber of Commerce and Industry and the Korea-Vietnam Friendship Association. On Dec. 22. The two countries celebrate the 30th anniversary of the bilateral ties.

According to KITA, Vietnam is Korea’s third-largest trade partner and sixth-largest importer of Korean goods. Trade volume between the two countries has surged from $500 million in 1992 -- when bilateral trade ties were first established -- to $80.7 billion last year, it said.

Korea’s key export items include semiconductors, displays, sensors, and smartphone parts that make up more than half the total exports to Vietnam, while its key imports from Vietnam include smartphones, PCs, and clothes that are produced by Korean firms locally.

“Korea and Vietnam have nurtured a solid partnership based on increased trade, investment, and human and cultural exchanges,” Jeong said. “Now is the time to seek a new direction of our partnership as the ever-evolving global trade environment is emerging as a new factor.”

Jeong said Vietnam has seen stunning economic growth thanks to its abundant cheap labor that has made it a major global production base. But he added that such an advantage is losing competitiveness, as the gap in labor costs is being narrowed with those of other emerging markets.

“Vietnam needs to prepare for its next step,” Jeong said. “The country should be ready for an industrial transformation from a manufacturing-focused industry to a technology- and capital-intensive industry.”

Amid a falling birth rate, Korea is also experiencing drastic changes across industries, he said. Many companies are going abroad to find business opportunities, while increasingly relying on foreign workers.

He also pinpointed that many companies doing business in China are seeking an alternative market as part of efforts to diversify their supply chains.

Jeong highlighted that Korea and Vietnam can tackle their own challenges by teaming up together, saying “Those challenges could turn into new opportunities.”

In order to renew their economic ties, he asked the Vietnamese government to offer more tax cuts and incentives for Korean firms, especially when they make technological investments or relocate their production facilities into the country.

He also expressed hopes for cooperation on carbon neutrality, citing nuclear power and renewable energy resources as promising sectors.

He also renewed KITA’s commitment to bolstering bilateral ties to the next level.

By Lee Ji-yoon

Korea Herald correspondent