Logo of Phnom Penh Post newspaper Phnom Penh Post - Korean entrepreneurs pivot toward Asean on back of New Southern Policy

Korean entrepreneurs pivot toward Asean on back of New Southern Policy

Content image - Phnom Penh Post
Vietnamese National Assembly chairwoman Nguyen Thi Kim Ngan meets with South Korean President Moon Jae-in in the Blue House on December 6. TRONG DUC/VNA/VNS

Korean entrepreneurs pivot toward Asean on back of New Southern Policy

THE KOREA HERALD/ANN: In line with the South Korean government’s push to strengthen diplomatic and economic ties with Southeast Asia, Korean entrepreneurs are increasingly seeking new opportunities in the region to benefit from its fast-growing economies, which have a combined population of 630 million and a combined gross domestic product of $2.4 trillion.

The New Southern Policy is the Moon Jae-in administration’s key foreign economic policy and reflects its strong commitment to prosper together with the Asean countries – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

In line with the policy, a special committee was launched in August within the Blue House, which is the executive office and official residence of the South Korean head of state, comprising around 30 officials from 14 ministries.

Last week, the committee, led by Chairman Kim Hyun-chul, announced that it would provide a guaranteed one trillion won ($800 million) between now and 2022 to support small and midsized companies in advancing into the Southeast Asian market, with some 15 billion won allocated for next year.

The Korean Ministry of Trade, Industry and Energy is currently participating in negotiations toward an Asean-led mega trade deal, called the Regional Comprehensive Economic Partnership. Separately, the ministry is also pushing for bilateral trade deals with Indonesia and Malaysia to intensify economic and investment cooperation.

“Asean and India are important to us to the extent that our future relies [on them] . . . I found that the New Southern Policy is very important from the perspective of expanding mutual economic cooperation and diversifying our export markets,” President Moon said after his trip to attend the Asean and Apec summits last month.

He also called on ministries to work together to host the special Korea-Asean summit, to be held in Korea next year to mark the 30th anniversary of diplomatic relations between Korea and the Asean region.

The New Southern Policy is expected to accelerate the economic partnership between the two sides, which have seen a gradual rise in trade and investment in recent years.

In the decade ending last year, the trade volume between Korea and Asean went up to $149 billion from $61.8 billion in 2007, when the free trade deal first came into force. The trade volume is expected to reach $160 billion this year.

Content image - Phnom Penh Post
Presidential adviser for economic affairs Kim Hyun-chul, who heads the Presidential Committee on the New Southern Policy, speaks in Seoul on December 12 during a seminar on economic cooperation with the region. Korea Institute for International Economic Policy

Among Korean exports to Asean, the value of all exports from new industries such as next-generation chips, displays and premium consumer goods stood at $37.4 billion last year, surpassing exports of traditional industry products such as cars, steel, ships, petroleum products and synthetic resins, which totalled $31 billion.

Tech firms going to Asean

Many Korean companies are now enjoying business opportunities in the region thanks to its young, digitally connected population, its growing middle class and its rapidly urbanising towns.

Korea’s leading tech firms are not only providing advanced IT services and products for the Southeast Asian nations – they also contribute directly to the host countries’ economic growth by making significant investments.

Ever since 2009, Samsung Electronics has operated the biggest mobile phone factory in Hanoi, Vietnam, producing most of the smartphone products that Vietnam exports worldwide. Two of Samsung’s factories in Vietnam combined make 240 million units a year.

In October in Kuala Lumpur, Malaysia, Samsung unveiled its newest Galaxy smartphone, the A9, with the world’s first rear quad camera. This was Samsung’s first “Unpacked” event in Southeast Asia.

LG Electronics, another Korean tech giant, makes television screens in a $1.5 billion factory in Vietnam’s port city of Haiphong. The region has also served as a global production hub for TVs, mobile phones, washing machines and air conditioners.

The home-appliance manufacturer is planning to invest a total of $1.5 billion from 2013 through 2028.

LG’s battery-making unit, LG Chem, is targeting the electric-vehicle battery and energy storage service battery markets in Vietnam as it is actively exploring new markets.

The battery maker has forged a partnership with VinFast, Vietnam’s only automaker, to build an EV battery plant and supply batteries to nearby countries including Thailand, Singapore, Indonesia and the Philippines.

Mobile carrier KT is making aggressive inroads into the Southeast Asian region by helping provide ICT solutions for smart cities.

KT recently signed a partnership with Vietnam’s largest construction group, the Hoa Binh Corporation, to build artificial intelligence-enabled hotels and push for smart city projects in Southeast Asia.

In August, the telecom firm signed a 53 billion won contract with the Philippines’ Converge ICT Solutions Inc. to build an optical fibre network along some 1,570km of main roads in the northern region of Luzon.

Early this month, SK Networks, a trading unit of SK Group, announced that it would start a home-appliance rental business in Malaysia through its local office, SK Networks Retails Malaysia.

In the internet and mobile technology space, Naver is becoming more active within Southeast Asia, which is seen to have real growth potential.

The Line messenger service already has a foothold – mostly in Japan, Thailand, Taiwan and Indonesia – with more than 200 million active users per month.

In August, Naver invested $150 million in Southeast Asia’s ride-hailing giant Grab with Seoul-based Mirae Financial Group. Through Line Ventures, Naver has also made a strategic investment in iPrice, an e-commerce aggregation service in Southeast Asia.

Opportunities in Asean

Alongside tech firms, Korean companies are also gearing up their efforts to capture the growing business opportunities in the areas of transportation, infrastructure and energy in the region.

In Indonesia in 2014, steel giant Posco opened Krakatau Posco, Southeast Asia’s first-ever integrated steel mill, with a production capacity of three million tonnes.

Posco and Indonesia’s state-run Krakatau Steel invested 70 per cent and 30 per cent, respectively, in the steel mill.

Last week, Posco subsidiary Posco Daewoo said it would conduct exploration drilling at an offshore well in Myanmar. The trading company said 105.3 billion won would be invested into the project from January next year onward.

Korea’s auto industry is also shifting its focus to Southeast Asia with the country’s number one automaker, Hyundai Motor, pioneering the transition.

Last month, Hyundai and Kia invested $250 million in Grab, Southeast Asia’s leading online-to-offline mobile platform, eyeing Southeast Asia’s growing ride-hailing market. They also plan to pilot electric-vehicle programmes across the region.

Korean auto parts manufacturer Hyundai Mobis opened a data centre jointly with a local company at a science park in Ho Chi Minh City, Vietnam, last year, which will promote the development of self-driving cars, the company said.

Hoping to increase its presence in the Southeast Asian defence market, Hanwha System participated in Asia Defense and Security 2018 last month in the Philippines, the company said.

Advancing into finance sector

In line with the government’s New Southern Policy, the number of local financial companies advancing into the Southeast Asian market has fast risen in recent years. According to the Financial Supervisory Service, the number of overseas offices of Korean financial companies has increased 20 per cent to 431 last year, from 359 in 2011.

One of the champions of Southeast Asian market expansion is KB Financial Group, steered by its flagship KB Kookmin Bank.

In July this year, Korea’s leading bank signed a deal to acquire a 22 per cent stake in Indonesia’s Bank Bukopin, rising as the local bank’s second-largest shareholder. Also, Liiv KB Cambodia, the bank’s local digital banking platform, launched in 2016, attracted over 34,000 users during the first 18 months of business.

Other Korean banks also plan to expand in the region. KEB Hana Bank has increased its presence in Indonesia to at least 59 offices in 11 provinces. KEB Hana Bank, Woori Bank, Shinhan Bank and the Industrial Bank of Korea are all operating in the Philippines.

Among asset management units, Mirae Asset Financial Group made visible progress this year.

Mirae Asset Global Investments Co acquired a full stake in Vietnam’s Tin Phat Management Fund Joint Stock Company in February this year, becoming the first Korean asset manager to set up a legal entity in the Southeast Asian state.

Also, Mirae Asset Life Insurance, the group’s insurer unit, announced in May that it had purchased a 50 per cent stake in Prevoir Vietnam Life Insurance and launched a joint corporation under the name Mirae Asset Prevoir Life Insurance.

MOST VIEWED

  • Investors’ $14.4M projects approved

    New investments from local and foreign sources continue to pour into Cambodia despite the Covid-19 pandemic remaining a lingering threat to regional and global economies. This comes as the Kingdom’s gross domestic product (GDP) is expected to contract between one and 2.9 per cent this

  • NagaWorld casinos set to reopen, schools to follow

    NAGACORP Ltd has requested that it be allowed to reopen its NagaWorld integrated resorts in Phnom Penh after the government recently approved casinos to operate again, provided they follow Covid-19 prevention measures set by the Ministry of Health. Mey Vann, the director-general of the Ministry

  • Rubber exports stretch 17%

    Cambodia exported 97,175 tonnes of natural rubber in the first five months of this year, surging 17 per cent compared to the same period last year as the Covid-19 pandemic stretches on, Ministry of Agriculture, Forestry and Fisheries official Khuong Phalla told The Post on Thursday. Phalla,

  • ASEM supports Kingdom’s proposal to postpone meeting amid Covid

    The 13th Asia-Europe Meeting (ASEM13) scheduled to be held in Cambodia in November has been postponed until mid-2021 due to the Covid-19 pandemic, a Ministry of Foreign Affairs and International Cooperation press statement released on Saturday said. The decision was made during a two-day meeting

  • Coffee maker roasted for producing fake product

    The Ministry of Interior’s Counter Counterfeit Committee will send a suspect to court on Monday after she allegedly roasted coffee mixed with soybeans and other ingredients, creating a product which could pose a high risk to consumers’ health. On the afternoon of July 2, the

  • Cash handout programme 80% complete

    Minister of Social Affairs, Veterans and Youth Rehabilitation Vong Soth confirmed on Thursday that the implementation of the Cash Transfer Programme For Poor and Vulnerable Households During Covid-19 had been implemented for more than 80% of the over 560,000 families. The programme was introduced one week ago.

  • Cambodia armed with money laundering laws

    Money laundering will now carry a penalty of up to five years in prison while those convicted of financing terrorists will be jailed for up to 20 years, according to new laws promulgated by King Norodom Sihamoni and seen by The Post on Thursday. Comprising nine

  • Where is Cambodia’s exit strategy that can save the economy?

    With the prospect of being slammed by a double whammy, the government is working on an economic recovery plan to deliver it from Covid-19 and the EU’s partial withdrawal of the Everything But Arms scheme in the next two to three years Cambodia is

  • Schools to be reopened in ‘three stages’

    With guidance from Prime Minister Hun Sen, the Ministry of Education, Youth and Sport, is in the process of reopening schools in three stages. But no timeline has been set, ministry spokesperson Ros Soveacha said on Thursday. Soveacha said the first stage will be to

  • Thai border crossings eased

    The Cambodian Embassy in Thailand said in an announcement on Wednesday that Thailand’s government has allowed certain passengers from several countries to enter its borders. The visitors must go back to their country immediately after their duties in Thailand are fulfilled, the embassy said.