South Korean President Moon Jae-in has proposed his “New Southern Policy” during his recent eight-day tour of three Southeast Asian nations. The key of the new vision, which was announced in Indonesia on November 9, is to elevate the relationship between South Korea and the Association of Southeast Asian Nations, known as ASEAN, to the same level as the one between Korea and its four surrounding countries. A dramatic improvement in the cooperative relationship between Korea and ASEAN will certainly create many economic opportunities. Here is commentator Chung Chul-jin to examine what the “New Southern Policy” is all about.

On the external front, the Moon Jae-in government is pushing for two economic policies, namely, the New Northern Policy and the New Southern Policy. The northern policy seeks to strengthen economic cooperation with Russia’s Far East, three northeastern provinces of China, Central Asia and Mongolia. In an effort to find another opportunity in southern regions, South Korea will now boost economic cooperation with ASEAN. The basic idea of the New Southern Policy is to form a people-centered, peace community that advocates co-prosperity. It is in line with Moon’s domestic policy of the “people-oriented economy.” Under the new vision, South Korea will engage in brisk exchanges with ASEAN and prosper together, unlike some powerful countries that exploited small ones in the past.

Along with the “New Northern Policy” that Moon announced during his Russia visit in September, its counterpart the “New Southern Policy” seeks to expand South Korea’s economic territory. For that purpose, the government has set a goal of increasing Korea’s bilateral trade volume with ASEAN to 200 billion US dollars by the year 2020. That is similar to the current trade volume between South Korea and China. The Korean economy is not the only one that will benefit from the envisioned growth. Under the vision of a people-centered, peaceful community, where people can prosper together, Korea will open a shared future with ASEAN, which has huge growth potential.

A population of 620 million is what makes ASEAN attractive. More importantly, more than 40 percent of the population is economically active. In addition to its young population, ASEAN boasts a GDP of 2.6 trillion US dollars. Moreover, the region is growing very fast. ASEAN posted 37.6 billion dollars of GDP in the 1970s, indicating that its economy has grown by nearly a hundred-fold over the last 40 to 50 years. By increasing exchanges with this promising region, South Korea will hopefully grow along with it.

The population of ASEAN has exceeded 600 million for the past 50 years since its establishment in 1967. It is the world’s third largest population after China and India. Its gross domestic product of around 2.6 trillion dollars is the sixth-largest in the world. Posting an annual growth rate of about 5 percent, ASEAN may possibly become the fourth-largest economy in the world by 2030. With a high rate of young workers and the fast-growing middle class, ASEAN has a big potential as a consumer market, emerging as another production base and strategic market that could replace China. South Korea has maintained a close relationship with ASEAN since it signed a bilateral free trade agreement, or FTA, ten years ago.

South Korea inked an FTA with ASEAN in 2007. The trade volume between the two amounted to nearly 120 billion dollars as of the end of last year, accounting for 13 percent of South Korea’s total trade. Now, ASEAN is Korea’s second-largest trading partner after China. Korea’s exports to the region have grown an average 7.5 percent annually, compared to 4.2 percent with the U.S. and the 4-percent range with China. What’s more, Korea’s trade surplus with ASEAN has increased gradually. If South Korea explores the ASEAN market more aggressively through the New Southern Policy, it can find an alternative to China.

Trade between South Korea and ASEAN has grown rapidly since their FTA was concluded in 2007. Korea’s trade with ASEAN stood at 61.8 billion dollars in 2006, but it soared to over 118 billion dollars in 2016, posting an annual growth rate of 6.8 percent. Korea’s shipments to ASEAN accounted for 15 percent of its total exports last year, up from 9.9 percent in 2006, while the annual growth rate of imports from the region was tallied at 3.3 percent. South Korea sees ASEAN as a new business opportunity and plans to use the region to reduce its dependence on the Chinese market. The world is already paying attention to ASEAN, which is characterized by low wages, growing local demand and the need for improving infrastructure.

The entire world is well aware of ASEAN’s high potential. Japan and China, in particular, have had their eyes on the region for a while. In the early phase, these countries provided hundreds of billions of dollars to take root in the region. Then they increased their profits through various cooperation projects. Now, they are fiercely competing to develop social overhead capital, which is rather inadequate in ASEAN. Japan is staying ahead of the competition, having already provided more than 1 billion dollars of official development assistance, or ODA, to Vietnam. Korea’s ODA to Vietnam amounts to 200 million dollars, five times less than Japan’s. Even from now, South Korea should approach the region in its own effective way.

In 2003, foreign direct investment in ASEAN stood at a mere 29.3 billion dollars. But the figure jumped to over 120 billion dollars last year. It costs a large amount of money to improve infrastructure, and this issue has emerged as the top priority in ASEAN. At present, China and Japan are engaging in an intense competition to win orders in the regional infrastructure market. China plans to spend 1 trillion dollars of its government fund in building infrastructure in ASEAN to encourage its companies to advance into the market. Japan has already poured a lot of money into the region since it announced the Fukuda Doctrine in the 1970s. In this situation, attention turns to what strategy South Korea should adopt to approach ASEAN.

In the initial stage, I think South Korea will have to use similar methods employed by China and Japan. Korea may provide money in building infrastructure, carry out joint development projects and share the profits later. Unlike China and Japan, however, Korea could transfer relevant technologies to ASEAN to build mutual trust. In the case of Africa, many local people use smartphones, although they don’t have home phones. That means a certain development phase can be skipped to move forward new, more advanced infrastructure. In a similar way, ASEAN may move directly into a digital era. South Korea has an edge in building infrastructure for smart devices or services, so it could focus on this point. Under its new policy, South Korea seeks to create a people-centered community that will achieve peace and co-prosperity, not attempting to gain one-sided benefits through ASEAN. Based on mutual confidence in this initiative, South Korea can appeal to members of ASEAN as a new, reliable partner.

While introducing his New Southern Policy, President Moon defined a so-called “3P community” as a slogan for economic cooperation with ASEAN. “3P” stands for people, peace and prosperity. More than just expanding economic cooperation, the vision is to form a community where participants can grow together. It will be necessary for Korea to foster a broad consensus with ASEAN to implement the initiative successfully.