ⓒ YONHAP News

Korean President Moon Jae-in visited Singapore and Papua New Guinea last week to attend a series of multinational summits, including those related to the Association of Southeast Asian Nations known as ASEAN and the Asia-Pacific Economic Cooperation or APEC forum.

The 20^th Korea-ASEAN summit on November 15, in particular, served as an opportunity for the Korean president to explain and promote his “New Southern Policy.” During the event, Moon pledged to strengthen economic cooperation with ASEAN and regional states like India.

Here’s Choi Jin-bong(최진봉), commentator and professor at Sungkonghoe(성공회) University, to explain more about the New Southern Policy.

Korea’s trade has mostly been focused on Japan and the U.S. to the east and China to the west. But now, the nation seeks to expand its economic territory north to Russia and south to Southeast Asia. In line with this initiative, the New Southern Policy is aimed to better connect Korea to ASEAN by boosting economic exchanges with the region.

The key behind this new vision is to elevate the relationship between Korea and ASEAN to the same level as the one between Korea and major powers in the peninsular region. ASEAN member states have developed their economies very fast, emerging as important global market hub. The New Southern Policy pursues closer cooperation with ASEAN as Korea’s future economic partner for the sake of Korea’s own economic growth over the long term.

Korea has formed close economic relations with the U.S. and Japan to the east since its modernization, while developing similar ties with China to the west during the post-Cold War era. In other words, the nation has fostered an east-west economic axis for decades. But it is now seeking to shift the economic focus to ASEAN and India to the south and southeast of the Korean Peninsula. The purpose, of course, is to explore new markets.

Many are concerned about Korea’s heavy economic dependence on the U.S. and China, especially given increasing risks stemming from the ongoing trade dispute between the two major economies. Also, Korea has often been at odds with Japan over sensitive historical issues. With Korea rather vulnerable to ever-changing political and economic conditions in the region, it is necessary to improve its current structure of foreign trade that relies excessively on the U.S., China and Japan.

As an alternative, Korea needs to focus more on members of the ASEAN community such as Laos, Myanmar, Malaysia, Vietnam, Brunei, Singapore, Indonesia, Cambodia, Thailand and the Philippines. Also, India can be another partner in Korea’s New Southern Policy. Based on stronger economic ties with those countries, Korea aims to increase exports and achieve economic stability.

The escalating trade war between the U.S. and China is increasingly impacting the Korean economy, and diplomatic conflict between Korea and Japan over historical issues is also a stumbling block in the Korean economy.

In this situation, India and ASEAN are emerging as new markets for Korea to explore. ASEAN and India have seen 5 percent and 7 percent annual growth, respectively. India, in particular, is expected to become one of the five largest economies in the world by the year 2030.

Indeed, Korea’s New Southern Policy has made rapid progress since it was first announced in November last year.

While visiting Indonesia, Vietnam and the Philippines last year, President Moon proposed his New Southern Policy and defined the “3P community” as a slogan for economic cooperation with ASEAN. Korea has since boosted exchanges with ASEAN and India in various areas.

As of October this year, trade volume between Korea and ASEAN reached 132.1 billion US dollars, up 7.6 percent year-on-year. Notably, Vietnam is now the third biggest export destination for Korea, behind China and the U.S.  Clearly, the New Southern Policy is producing positive results.

The new policy follows the so-called “3P” strategy. 3P here stands for people, peace and prosperity. The proposal calls for Korea and ASEAN to open an era of full-fledged cooperation through joint-vision and coordination of the 3Ps.

President Moon has visited four out of 10 ASEAN member states over the past year, and plans to visit all ten by next year. Following Moon’s state visit to India in July this year, First Lady Kim Jung-sook made her trip to the country alone early this month. It shows that Korea is paying special attention to the largest single market in the region.

Korea’s exports to ASEAN rose to its highest-ever level during the January-October time period this year, amounting to 82.3 billion US dollars. By sector, infrastructure construction merits attention.

ASEAN has become Korea’s biggest source of orders for overseas infrastructure construction, surpassing the Middle East, from which Korea received most of its construction orders in the past.

From January to October this year, Korea received construction orders worth 9.9 billion dollars from the target nations of the New Southern Policy. This accounts for 41 percent of Korea’s total construction orders abroad, compared to 8.6 billion dollars or 36 percent for the Middle East. I imagine there will be even more opportunities for infrastructure cooperation between Korea and ASEAN.

During the ASEAN-Korea Infrastructure Ministers’ Meeting in September, Korea agreed on 20 cooperation projects with the 10 ASEAN member states. The projects include renovation of Route 8 in Laos, construction of smart city infrastructure in Kota Kinabalu, Malaysia, the Yangon urban expressway development project in Myanmar, and the new Dumaguete Airport development project in the Philippines.

In addition, Korea’s major manufacturing industries such as steel, petrochemicals, and energy have secured a foothold in Indonesia, Vietnam and India. In the midst of a global auto industry slowdown, Korean carmakers are faring well in India with an annual growth rate of 6.8 percent, outpacing growth rates in both the US and China.

Thanks to increasing people-to-people exchanges between Korea and the target countries of the New Southern Policy, the number of two-way visitors is expected to surpass 10 million this year for the first time.

In light of the new initiative, Korea will push for bilateral free trade agreements with Indonesia and Malaysia. At the ASEAN meeting last week, President Moon proposed holding a special Korea-ASEAN summit in Korea next year as well as a summit with leaders of nations located along the Mekong River.

However, Professor Choi says Korea must be careful to carry out the policies in a consistent manner and build trust with ASEAN and India.

It is necessary for the Foreign Ministry to build an institutional framework for improving the economic structure in target nations. The ministry could create a special team consisting of experts and come up with ways to enable Korea to get closer to those countries quickly and boost exchanges with them properly.

Korea also needs to work out long-term plans and establish confidence with Southeast Asian nations so they will not regard Korea as a country that only pursues only its own interests. If Korea engages in exchanges with the nations consistently as a reliable partner, it will be able to build up trust gradually. Based on mutual confidence between the two regions, Korea will push for its New Southern Policy in a more effective way.

The New Southern Policy is expected to serve as a new breakthrough and a great booster for the Korean economy. But Korea is not the only country that has its eye on ASEAN and India. It will be necessary for Korea to continually calibrate more specific and feasible plans to press ahead with its policy and economic goals.