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South Korea seeks to improve relations with Asean states

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Asean-Korea Centre secretary-general Lee Hyuk gives the opening talk at the Asean Connectivity Forum. Photo supplied

South Korea seeks to improve relations with Asean states

The Republic of Korea is moving to improve its relations with Asean countries, and has pledged to boost investments in infrastructure in the region to compete with China and Japan, the Secretary-General of the Asean-Korea Centre said.

The pledge was made during the three days of the sixth Asean connectivity forum in Seoul this week.

Lee Hyuk, secretary-general at the Asean-Korea Centre, which organised the event, said the Korean government will raise $100 million by 2022 to create the “Asean-Korea Infrastructure Fund” to promote mutual cooperation in four key areas, including transportation, energy, water resources and smart cities.

“Asean connectivity underpins the community-building process and will aid Asean member states to further integrate themselves by creating a competitive region, increase innovation and resilience, and provide a long-term foundation for inclusive and equitable growth in the region,” Lee said.

However, while noting that Asean countries have continuously stepped up efforts to enhance physical connectivity, Lee said many competitive Korean companies are still struggling to compete with the Chinese and Japanese to secure projects.

“With the recent trend of public-private partnerships (PPP), it is important for private [Korean] companies to equip themselves with the capacity for project financing,” he said.

“Against this backdrop, this year’s forum is timely and meaningful and will provide the Korean business community with substantial information on successful project financing and open up wider opportunities for them to participate in connectivity-related infrastructure projects in the region,” Lee said.

Home to 640 million people, Asean as a region has a $2.8 trillion GDP with a trading volume of $2.6 trillion and average annual growth of five per cent. The Korean government seeks to increase bilateral trade between the two countries to $200 billion by 2020.

Asean is currently is the world’s fifth-largest economic power and plays a key role in the global economy. The region is Korea’s second largest trade partner with bilateral trade volume reaching nearly $150 billion last year.

It is also Korea’s third largest investment destination at $5 billion in 2016, according to a Korean Customs Service report.

The report says Cambodia stood at seventh place as a Korean investment destination, valued at $137 million last year. Vietnam and Singapore stood at the top, attracting more than $1 billion each.

The trade volume between Cambodia and Korea reached more than $860 million last year. Cambodian exports to Korea were valued at $261 million while imports topped $603 million, the figures show.

During the forum, each Asean country demonstrated its potential infrastructure investments in order to attract more Korean investors.

Cambodia positioned itself as an Asean hub for transportation, planning six logistics complexes and 25 sub-complexes nationwide under the PPP policy.

The Cambodian Ministry of Public Works and Transport director-general Chhieng Pich said: “If you invest in Cambodia, you not only [serve] 15 million people, instead you will serve more than 600 million.”

Major Cambodian infrastructure projects are currently granted to the Chinese such as the $1.9 billion expressway project from Phnom Penh to Sihanoukville.

Lee said while Cambodia is a potential destination for Korean companies, the country should have some kind of balance.

“I think there is too much Chinese domination of Cambodia and I think too much dependence on one country is always risky,” he said.

However, Pich said the Kingdom’s plans for railway linkage to Vietnam will be open under the PPPs.

“Another project is the railway linkage from Phnom Penh to the Vietnamese border, which is a missing link between Asean and Kunming. It is top priority and we are working with private investments, especially with PPPs,” he said.

According to the Asean-Korea Centre, infrastructure demand in Asean countries is projected to amount of about $3.3 trillion by 2030.

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