Seoul sharpens SE Asia focus amid tiff with Beijing

By Cathy Rose A. Garcia
Associate Editor

SEOUL — South Korean President Moon Jae-in is visiting Manila to attend the 31^st Association of Southeast Asian Nations (ASEAN) Summit, amid his efforts to elevate ties with the regional bloc to the same level as relations with United States, China and Japan.

“Just after President Moon took office in May this year, he declared that he will upgrade our relations with ASEAN,” Kwon Jae-hwan, director for the ASEAN Cooperation Division at the Ministry of Foreign Affairs, said during briefing for ASEAN journalists here on Oct. 18.

Mr. Moon will deliver a speech on Nov. 13 at the ASEAN Business and Investment Summit at the Solaire Resort & Casino in Parañaque City, Philippines where he will outline his vision for a Korean-ASEAN community.

South Korea’s pivot towards Southeast Asia came after China began an economic boycott over the deployment of the United States’ Terminal High Altitude Area Defence system earlier this year.

The Chinese began shunning Korean stores in China and avoided visiting South Korea, dealing a blow to the tourism industry that has relied on Chinese tourists for so long.

Even before Mr. Moon’s declaration though, economic ties between ASEAN and South Korea have already been strong, especially after the free trade agreement was signed in 2006.

“The FTA has been contributing a lot to the increasing trade volume and investment between ASEAN and Korea… From the year 1989 and until now, you can see trade volume has increased 15 times. Investment from Korea to ASEAN has increased 21 times,” Mr. Kwon said.

ASEAN is South Korea’s second-largest trade partner with $118.8 billion in bilateral trade in 2016, after China with $211.4 billion.

South Korean companies invested $5.1 billion in ASEAN countries last year, making the 10-member bloc that neighbor’s second-largest foreign investment destination after the United States with $12.9 billion.

However, the Philippines received only $11.36 million in foreign direct investments from South Korea in 2016, according to data from the Philippine Statistics Authority.

“ASEAN is very important investment partner for Korea. Among the 10 countries, if you refer to the ranking, Vietnam is the number one investment destination. It’s mainly due to the fact that Korean companies are focused on investing in the infrastructure sector in Vietnam, especially construction,” ASEAN-Korea Centre Trade and Investment Unit Senior Officer Jung Ji-seung told BusinessWorld on Oct. 18.

Indonesia is another priority market for Korean companies because of the big population and its market potential, Ms. Jung said.

“It really depends on the sector, which sector Korea and ASEAN have cooperation with. That influences the investment relations between the countries,” she added.

TARGETING SOUTHEAST ASIANS
ASEAN is the number one travel destination for Koreans, with 6.16 million visiting Vietnam, the Philippines, Thailand and other member-states last year.

Around 1.15 million tourists from South Korea visited the Philippines in 2016. This is expected to exceeded this year, as 1.07 million South Koreans traveled to the country in the January-August period.

Only 2.21 million tourists from ASEAN countries went to Korea in 2016. Of this figure, 556,745 Filipinos traveled to Korea last year, the biggest number among ASEAN countries.

China was Korea’s biggest source of inbound tourists last year at eight million. However, Korea’s reliance on Chinese tourists proved to be its undoing, after Beijing banned group tours to the country during its dispute over THAAD. Chinese tourists to South Korea plunged nearly 50% to 2.5 million in the first seven months of 2017, from 4.7 million during the same period in 2016.

This prompted the Korea Tourism Organization (KTO) to focus efforts on attracting more tourists from the United States, Europe and, closer to home, ASEAN members.

“One big market is Southeast Asia. To attract travelers from that region, we are working with the Ministry of Immigration to facilitate the visa issuance process. The second thing is we will try to do is expand air connectivity between the countries,” KTO Director for Planning and Coordination Department Kim Syung-hoon told BusinessWorld in his office in Wonju, Gangwon Province on Oct. 16.

Mr. Kim said the government has been working to ease the visa process for key markets like the Philippines, Vietnam and Indonesia.

“Our competitors for (those markets) are Japan, Taiwan and Hong Kong. We are now comparing the visa systems of our competitors and our target is to facilitate the visa process and make it equivalent to that of our competitors,” he said.

Taiwan started implementing visa-free entry for Filipinos visiting the country for tourism and business for 14 days. The nine-month trial period will last until July 31, 2018.

Mr. Kim said one proposal involves the issuance of electronic visas for group tours from the Philippines, Vietnam and Indonesia, while another proposal would allow visa-free stay in mainland Korea for five days if they will go to Jeju island via Incheon or Gimhae airports.

“What we are doing is the electronic visa for the group tours… We are working on that since March with the Ministries of Immigration, and Culture & Tourism. Our goal is to implement this system within this year. But there are still many details we need to review… We hope this would also work for Vietnam, Philippines and Indonesia as well,” Mr. Kim said.

At present, Filipinos need to get a visa to visit mainland Korea, but can visit Jeju island without a visa.

The South Korean government announced on Nov.7 that visitors from the Philippines, Vietnam and Indonesia will be allowed to enter South Korea without a visa if they arrive at Yangyang International Airport near PyeongChang, where the Winter Olympic and Paralympic Games will be held in February and March. In an effort to boost ticket sales for the games, tourists from these three countries will be allowed visa-free entry until April.

Philippine Ambassador to South Korea Raul S. Hernandez said the relationship between the two countries remains strong.

“We are very close friends with Korea. We help each other in different issues, not only bilateral issues but also multilateral issues. Korea is a partner of the Philippines in terms of helping both people grow and develop and progress,” he told BusinessWorld at the Philippine embassy on Oct. 16.

“Also, our defense cooperation is very robust. Korea has helped us with our modernization efforts. We buy many of our equipment from Korea, jet fighters, ammunition and boats. Korea is also donating some military equipment.”

South Korea is the seventh-largest trading partner of the Philippines with about $7.75 billion in 2016.

Exports to Korea reached $2.18 billion, with electronics products accounting for 43%, followed by other manufactured goods (14.8%), fresh bananas (5.8%), copper concentrates (5.3%) and pineapple (4.2%).

Philippine imports from Korea reached $5.56 billion, the bulk of which are electronic products (34.7%), followed by mineral fuels (16.2%), industrial machinery (9%), transport machinery (8.9%) and textile yarn (3.3%).

Mr. Hernandez said South Korea is keen on funding infrastructure projects, which is in line with the Philippine government’s massive infrastructure program that will see P8.44 trillion in public funds spent on this concern until 2022.

“Mostly, it’s the infrastructure projects they are interested in,” he said.

The Department of Finance said South Korea is offering a $1.7-billion credit facility and another $7 million through non-lending programs to the Philippines through the Export-Import Bank of Korea, which manages its official development assistance facility.

The South Korean government identified information and communication technology, transport and energy as possible areas for loan assistance to the Philippines. A signing ceremony is scheduled at the sidelines of the ASEAN Summit.