A Free Trade Agreement between Vietnam and the Republic of Korea (RoK) took effect in December 2015. However, Vietnamese businesses are finding it more and more difficult to penetrate the market as the RoK tightens up on rules and regulations.

These technical barriers raise concerns for local small, and large businesses.  Under the terms of the trade pact, Vietnamese businesses have been very hopeful of boosting exports to the ROK as the tariffs are substantially reduced. The ROK pledged to reduce tariff margins of 95.4% while Vietnam also pledged to lower tariff of 89.9%.

Businesses encounter difficulties with import standards

According to the Ministry of Industry and Trade, although Vietnamese agricultural businesses are placing their products under preferential tariffs of the Vietnam-Korea Free Trade Agreement (VKFTA), they are being carefully reviewed and inspected before entering the ROK market.

Therefore, these products are imported into the ROK market in limited quantities, this includes fresh produce such as dragon fruit, coconut, mango, guava, banana, carrot, broccoli, and cabbage.

For processed vegetables and fruit, the crops in Vietnam need to meet the new standards under the export license issued by the ROK. They are closely monitoring the production lines, schedules, processing machinery and storage methods.

Mr. Hong Won Sik, representative of Lotte Group, said Vietnam agricultural products are cheaper than that of Thailand and China, but the quality can often vary.

ROK importers are especially raising strong concern over the two main mistakes in quality Vietnamese farm companies make. There are often strange objects in their products, such as soil, hair or leaves, and the packaging is often broken.

Other concerns involve size, flavour, colour and design. Experts even said while ROK is tightening import standards, some local companies in Vietnam are rather vague about the export conditions to the Korean market.

Mr Tran Vinh Quang, representative of Khue Nhat An Food Co, Ltd, said his company plans to allocate six hectares of agricultural land in the southern province of Binh Thuan for growing chilies, but it does not know how to meet standards set by ROK importers in terms of varieties, fertiliser quality and the amount of pesticide.

Similarly, Nam Roi Grapefruit Co-operative in the district of Vinh Hoa in the southern Vinh Long Province is also wondering about criteria to export their products to the ROK as the company is producing Nam Roi grapefruit under VietGAP standards.

Improving the quality of the product to overcome technical barriers

Mr Nguyen Quang Phuc, from the Ministry of Industry and Trade's Import-Export Department said Korean businesses and associations have made thorough preparations to enjoy preferential tariffs when VKFTA takes effect.

Meanwhile, many local businesses are still confused on how to introduce goods into the ROK. They lack information and knowledge about the benefits brought from VKFTA.

Mr Phuc noted that the only way for businesses to boost exports to the ROK is to learn about regulations on the quality, food safety and hygiene and technologies, production procedures to overcome technical barriers.

Mr Phuc warned local businesses about ROK tightening regulations on import standards compared to other nations, adding that the ROK can reject batches of goods when they find that they do not meet standards on food safety and hygiene.

Chu Thang Trung, trade counselor in the ROK said over the years, ROK have mainly imported farm produce from China. However, in recent time, the ROK tends to seek other supplies in South East Asian nations including Vietnam. This could be highly beneficial if the farming companies can meet the standards enforced by the ROK.

In 2016, Vietnam grossed more than US$1.4 billion from exporting agricultural products to the ROK,  accounting for 4% of the import demands of the ROK. Each year, the ROK imports US$33 billion of agricultural products from different nations.

Mr Trung said there are bright prospects for Vietnamese businesses to export their farm produce in the ROK market when they take full advantage of the VKFTA.

Mr Trung noted that local businesses should pay special attention to the consumers’ tastes to make proper adjustments, also saying that they need to conduct a market survey in the ROK to learn about Korean consumers and participate in more fairs and exhibitions to get a better feel for the market.

VOV