High-ranking officials, politicians and scholars from several Southeast Asian nations recently gathered in Hanoi to attend a workshop on economic partnership between Korea and the region. Some of them proposed that cooperation with Korea go beyond industrial and financial sectors to cover climate change, population aging and the environment.
The workshop, hosted by the Korea Development Institute, a state-funded think tank in Seoul, was part of a series of consultations with a group of developing countries that have learned from Korea’s development experience under a scheme named Knowledge Sharing Program.
Southeast Asia has benefited most from the program, which Korea launched in 2004. Of the 320 KSA projects conducted throughout last year, 99 were tailored for six countries in the region ― Cambodia, Indonesia, Laos, Myanmar, the Philippines and Vietnam. Benchmarking the Korean model, Vietnam set up a development bank, Indonesia drew up a roadmap for developing its bond market and the Philippines reformed its fiscal management system.
The relevance and effectiveness of the program was verified by calls for wider cooperation with Korea at the workshop in Hanoi.
It is sensible that Seoul officials plan to further activate KSP projects and seminars to build a network for economic development molded after the Korean framework across Southeast Asia. Such bid will not only help Southeast Asian economies learn more from Korea’s development process but facilitate Korean businesses’ advancement into regional markets.
More significance is being attached to the active implementation of the KSP as Korea is competing with China and Japan to secure a wider foothold in the vast zone of the Association of Southeast Asian Nations. The 10-member ASEAN, with a population of 600 million and a combined gross domestic product of $2 trillion, is emerging as another growth engine for the world economy that has slowed down since the global financial crisis in 2008-09.
China and Japan, the world’s second- and third-largest economy, have tried to court Southeast Asian countries with massive development assistance. Japan promised to offer $7.4 billion in aid to help finance development projects in five countries along the Mekong River by 2015 during a meeting of their leaders in April. China is planning to launch a lending institution capitalized with about $10 billion to support infrastructure projects in the region.
Korea finds it beyond its means to level the playing field with the two giant economies in terms of development assistance. The country, therefore, has focused on forging friendly and cooperative atmosphere with Southeast Asian nations through schemes matching their particular needs.
It may also work to its advantage that many Southeast Asian nations are wary of an increasingly assertive China and feel uneasy about Japan’s occupation of the region during World War II. The popularity of Korean pop culture is also helping foster the country’s positive image there, leading to a heightened consumer perception of Korean products.
Korean companies expect demand for their goods in Southeast Asian markets, which have a growing consuming class, to continue increasing for years to come. The emergence of Asia’s middle class with discretionary spending power has led them to shift their focus to digging further into the region’s domestic markets from operating manufacturing facilities there for exports to the rest of the world. According to statistics from the International Monetary Fund, the purchasing power parity-based GDP of the five major ASEAN economies ― Indonesia, Malaysia, the Philippines, Thailand and Vietnam ― increased by 42 percent from 2005 to 2010. It is projected to rise by a further 54 percent over five years through 2015.
In a survey of 219 Korean corporate executives last year, more than half chose Southeast Asia as a promising market to replace China. In the first six months of this year, Korea’s exports to ASEAN member states rose by 9.6 percent, while shipments to the European Union hit by debt crisis and China struggling to shore up growth slipped by 16 percent and 1.2 percent, respectively. Korean companies’ investment in the ASEAN increased five-folds over the past five years to an accumulated $4.62 billion at the end of 2011, surpassing $3.58 billion in China.
Going beyond sharing experience in development, Korea should take a long-term strategic approach in enhancing economic partnership with Southeast Asian nations. Instead of sticking to immediate business interests, it needs to be more accommodating and flexible in reciprocating with them to become a true and indispensable partner with one of the crucial regions that hold a key to its continued growth in a long period of global downturn.