Korean government, businesses tap resource-rich country after reforms


Korea is seeking to carve out its presence in Myanmar as sweeping reforms of the former pariah state entice global powers to tap its huge resource reserves and growth potential.

Despite diplomatic thorns and its limited trade with the country, Korea can capitalize on its experience of rapid industrialization and strength in construction and information technology in engaging what is called one of the next “Asian Tigers,” experts say. 

Korean Foreign Minister Kim Sung-hwan wrapped up his two-day trip to Myanmar Wednesday, laying groundwork for an enhanced partnership between the two countries.

The visit is part of world powers’ movement to thaw frosty relations and endorse ongoing democratic economic reforms after a half century of military dictatorship.

He met with his counterpart Wunna Maung Lwin and President Thein Sein and discussed political, security and economic issues surrounding the region and the world.

The first visit by Korea’s top diplomat in 27 years may prefigure a new era in the two countries’ checkered relations, experts say.

“The number ― 27 years ― tells you something new is going on,” says Jang Jun-young, a Myanmar specialist at the Center for Southeast Asian Studies in Hankuk University of Foreign Studies in Seoul.

“His trip will pave the way for Korea to resume its development assistance to Myanmar, which has been stalled in the face of Western pressure, and for further summit-level talks following the November ASEAN Summit in Bali, Indonesia.”

The two countries established diplomatic ties in 1975. The relationship has weathered a raft of tense moments including a 1983 terrorist bombing in Yangon by North Korean agents that killed 17 senior Seoul officials, suspicion over Myanmar’s clandestine arms ties with Pyongyang and Western-imposed sanctions targeting its iron-fisted military rulers.

The U.S., EU and other countries have been lining up to reengage with Myanmar since its new nominally civilian government embarked on democratic reforms last year.

With some sanctions being lifted, the resources-rich country is expected to transform into a new regional growth center, offering ample opportunities to foreign manufacturers, builders, miners, utilities and telecom service providers.

Korea is jumping into the wagon, seeking to diversify the nation’s economic cooperation with Myanmar through business deals, development aids and personnel exchanges.

Among Korea’s top interests are energy and resources as it seeks supply sources beyond the volatile Middle East.

“Korea may not be able to beat China or other major powers in terms of the scale of development aid but can take advantage of Myanmar’s big interest in Korean-style growth model,” says Oh Yoon-ah, a researcher at the state-run Korea Institute International Economic Policy.

Korea would be able to strengthen its ties with developing countries as they want to emulate its meteoric economic ascent on the back of sweeping, systemized industrialization, agricultural reforms and territorial development.

“Korea should craft a two-pronged policy targeting the public and private sectors simultaneously. It could help raise Myanmar’s capabilities in economic development, human resources and administrative reforms.”

Korean companies are gearing up for tough competition with Western and other Asian rivals in areas from oil and gas to manufacturing and construction to electricity and telecommunications.

Seoul’s presence in the Southeast Asian country lags far behind that of China and Japan, which are racing to scale up investment and assistance.

While sanctions kept U.S. and European firms away, China has managed to become Myanmar’s biggest ally and investor. The world’s second-largest economy is believed to have transferred more than $14 billion last fiscal year, accounting for 70 percent of Myanmar’s entire foreign direct investment intake.

In contrast, Korea injected a meager $1.07 billion last year, data by the Export-Import Bank of Korea shows. The figure more than halves if excluding a natural gas project by Daewoo International Corp., a local trading house.

About 100 Korean firms are currently operating there but almost 70 percent of them focus on the labor-intensive industries such as textile and sewing, according to the Ministry of Knowledge Economy.

Bilateral trade shot up more than 50 percent in 2011 from a year earlier but still stayed below $970 million, the ministry notes. The volume reached $30.8 billion with Indonesia and neared $20 billion with Vietnam during the same period.

The U.S. is also raising its bet, partially to fend off the formidable Chinese influence in the region, while Myanmar seeks to leverage friendly relations with both of them.

“Korea tends to drag out its decision as it walks on eggshells not to upset its Western allies,” says Yang Gil-hyun of Jeju National University.

“Though it’s important to keep pace with them, Korea’s passive steps may result in a lack of preemptive opportunities and presence in the region.”

Political friction remains a hurdle for Korea’s advance into the country traditionally close to North Korea. Pro-democracy advocates call for a slowdown in reengagement with Myanmar, demanding clear evidence of further progress, including the release of all political prisoners, solid steps to iron out ethnical strife and a definite end to military ties to Pyongyang.

Future disputes, like the recent one between Aung San Suu Kyi’s party and the Sein government over parliamentary oath, may also rattle what U.N. chief Ban Ki-moon called a “risky and fragile” reform process.

“Though I have a firm belief that Myanmar’s ongoing political reforms are for real and Suu Kyi plays an enormous role, it’s actually more complex than it looks,” Jang of HUFS says.

“If her party fails to embrace far-left groups and ethnic minorities they may turn toward the military-backed government, isolating opposition and creating tensions.”

By Shin Hyon-hee (heeshin@heraldcorp.com)