Yoon visits Vietnam to bolster economic, defense ties

President Yoon Suk Yeol inspects a guard of honor after landing at Noi Bai International Airport in Vietnam, Thursday (local time), for his three-day state visit to the country. Joint Press Corps

By Nam Hyun-woo

President Yoon Suk Yeol arrived in Vietnam, Thursday, for a three-day state visit seeking to boost bilateral economic ties and potential defense exports to the Southeast Asian nation.

During the state visit, Yoon plans to hold a summit with Vietnamese President Vo Van Thuong, Friday, and meet with top political leaders of the country including Communist Party of Vietnam General Secretary Nguyen Phu Trong.

It is Yoon's first bilateral visit to an Association of Southeast Asian Nations (ASEAN) member country since taking office in May 2022. He's also paying a return visit after then-Vietnam President Nguyen Xuan Phuc made a state visit to Korea last December.

During the summit, Yoon and Thuong are expected to explore ideas for improving the two countries' relations, which were elevated to a comprehensive strategic partnership last year.

Bilateral cooperation in security and the economy is likely to be high on the two leaders' agendas.

In a written interview with the Vietnam News Agency published Wednesday, Yoon said he seeks to “strengthen security cooperation with Vietnam to ensure a rules-based order can be established firmly in the Indo-Pacific region.”

“Korea will continue its cooperation for Vietnam's maritime security,” Yoon said. “And I also hope for expanded partnership in the defense industry, based on Korea's advanced technologies, which have been proven in the global market.”

Yoon also said that bilateral trade is contracting this year due to global economic uncertainties and other factors, and that he seeks to revitalize trade dynamism; noting that the Korean government is keenly focusing on key mineral supply chains, energy, the digital transition, smart cities and climate change as the main areas of future cooperation.

In line with this view, more than 200 Korean business leaders are part of Yoon's delegation to Vietnam, including Samsung Electronics Executive Chairman Lee Jae-yong, SK Group Chairman Chey Tae-won, Hyundai Motor Group Executive Chair Chung Euisun, LG Group Chairman Koo Kwang-mo and Lotte Group Chairman Shin Dong-bin.

For the respective company groups, Korea's enhanced ties with Vietnam provide a significant foundation, as their businesses in China are facing unprecedented uncertainties in the wake of the fierce rivalry between Washington and Beijing.

As firms are striving to hedge risks that stem from their hefty reliance on China, Vietnam is quickly emerging as an alternative. Last year, Vietnam became Seoul's third-largest trade partner following China and the United States.

Samsung is carrying out major projects in Vietnam, with its accumulated investments there amounting to $20 billion (25 trillion won) as of last year. Half of Samsung's smartphones sold across the world are manufactured in Vietnam.

Hyundai Motor also sees Vietnam as a hub for its Southeast Asia operations. As of May, Hyundai Motor took the top spot in sales volume in Vietnam, selling 22,903 vehicles in the market, and outperforming Toyota Motor, which sold 21,547 vehicles. Kia sold 13,951 vehicles in Vietnam during the first five months of this year.

The Surion helicopter / Courtesy of Korea Aerospace Industries

Hope for weapons deal

As Yoon stressed the importance of bilateral cooperation in the defense industry, hopes are growing among Korean military contractors for deals to export their weapons to Vietnam, which is now seeking to modernize its military while lowering its reliance on Russia. Vietnam had been relying on Russia for over 70 percent of its imported weapons.

Last year, Vietnam held its first defense expo, dubbed Vietnam International Defense Expo 2022, as part of its bid to promote cooperation with international defense companies and diversify its sources of defense procurement, with Vietnamese Prime Minister Pham Minh Chinh noting that the event will “help diversify the channels of procurement.”

GlobalData, an industry tracker, said in its report on the Vietnamese defense market that the country is “expected to invest in strengthening its air force capability” due to disputes in the South China Sea.

On the occasion of Yoon's visit, Korea Aerospace Industries is seeking significant progress in its long-time bid to sell its Surion transport utility helicopters to Vietnam.

Hanwha Aerospace is also looking for opportunities to export its K-9 self-propelled howitzer, which enjoys a market share of over 50 percent. In March, Vietnamese Minister of National Defense Phan Van Giang visited the contractor to inspect the K-9A1, a modified version of the K-9.