South Korea and Vietnam after starting negotiations in September 2012, the two sides formally signed the free trade agreement (FTA) on May 5, with South Korea's National Assembly approving the trade agreement on Nov. 30. The free trade pact between South Korea and Vietnam now will go into effect on Dec. 20, and will help fuel trade and expand investment opportunities, the government said Wednesday.

According to the Ministry of Trade, Industry and Energy, Seoul and Hanoi agreed on the effective date through diplomatic channels, with both sides wanting the pact to come into force as soon as possible.

The ministry said that with the FTA to be placed within the year, companies from the two trading partners can benefit from more tariff cuts starting 1st January 2016. Under the deal, tariffs would go down at the start of every new year, so 2016 will mark the "second year" of rate cuts.

The ministry in charge of trade and industry promotion said that with the FTA in place, it will become easier for local companies to do business in the Southeast Asian country.

Besides textiles and car parts, the bilateral FTA will open Vietnam up to South Korean consumer electronics and even cosmetics. The latter could provide more export opportunities for South Korea's medium-size enterprises. The pact will, moreover, allow greater access to Vietnam's service sector.

Seoul agreed to open 94.7 percent of its market, while corresponding numbers for Hanoi will reach 92.4 percent.

Vietnam is South Korea's third-largest export market after China and the United States. In the first 10 months of this year, outbound shipments to the country topped US$23.39 billion. The FTA will create a more stable business and investment environment.