HANOI, Dec. 17 (Yonhap) -- South Korea has played a key role in Vietnam's economic progress since 1992 when the two former battlefield enemies established diplomatic relations, with bilateral trade growing at a fast click during the past two decades, analysts say.
About 2,800 South Korean companies have hired some 400,000 Vietnamese and paid about US$1 billion in taxes to the Southeast Asian country, according to data compiled by Vietnam, underscoring the importance of South Korea's investments in the fast-emerging country's economy.
The Vietnamese government estimated that South Korean companies could pay more taxes when the government's corporate tax cuts meant to attract foreign investment expire. The Vietnamese government did not elaborate when those tax benefits will end.
The economic cooperation has boosted trade between the two countries. The two sides are likely to see their trade volume surpass US$20 billion this year, three years earlier than originally scheduled.
In September, South Korea and Vietnam agreed to forge a high-level and comprehensive free trade pact that covers goods, services, investment and intellectual rights as part of their efforts to strengthen economic ties.
South Korea already has a free trade pact on merchandise with the 10-member Association of Southeast Asian Nations (ASEAN), which took effect in 2007. Similar deals on services and investments also come into effect in 2009.
Vietnam is a member of ASEAN, but South Korea and Vietnam have been seeking to seal a bilateral free trade pact.
In November, South Korean President Lee Myung-bak and Vietnamese Prime Minister Nguyen Tan Dung held summit talks and agreed to work together for a quick conclusion of free trade negotiations between the two countries.
Vietnam is a fast-emerging country whose economy is growing at an annual rate of 5-8 percent on average. Vietnam was South Korea's 15th-largest trading partner last year, according to the South Korean government.
South Korea's exports to Vietnam stood at US$13.55 billion last year, up 40 percent from a year earlier, and imports also surged 53 percent to reach $5.08 billion over the cited period, according to the South Korean government.
South Korean companies' accumulated investments in Vietnam could top $25 billion this year, according to the Vietnamese government, making South Korea one of the key economic partners of Vietnam.
In October, Samsung Electronics Co., the world's top maker of computer memory chips and smartphones, said it will invest US$700 million into a new mobile phone factory soon to be built in Vietnam as part of efforts to expand its global production lines.
Samsung Electronics Vietnam Co. (SEV), Samsung's wholly owned Vietnam unit, has been operating a mobile phone factory in the northeastern rural district of Yen Phong since 2009, with its annual production capacity reaching 150 million units, according to Samsung.
SEV appears likely to ship goods worth between $11.5 billion and $12 billion this year, accounting for about 10 percent of $115 billion, Vietnam's total estimated exports this year, according to data of the Vietnamese government. SEV is set to become the No. 1 exporter of Vietnam this year.
E-Mart Co., South Korea's biggest discount chain operator, said last week that it will open its first Vietnamese store next year and expand the total number of stores in the country to 14 by 2017.
Last month, Daewoo Engineering & Construction Co., a major South Korean builder, broke ground for a US$2.5 billion project to build a new city in Vietnam.
The project calls for the construction of a residential complex and development of plots of land to be used for commercial, cultural and government buildings in 2 million square meters in Hanoi.
The growing economic ties have made South Korea, which became Asia's fourth-largest economy from the ashes of the 1950-53 Korean War, a role model for Vietnam's economy.
Vietnam sent about 20 senior officials to South Korea in June as part of its attempt to learn South Korea's economic development. Vietnam said it plans to send more officials to South Korea in coming years.
South Korea dispatched 320,000 troops to fight alongside U.S. and South Vietnamese forces during the 1960-75 Vietnam War.
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