General Background
Establishment of Sectoral Dialogue Relations
ASEAN and the Republic of Korea (ROK) first established their Sectoral Dialogue relations in November 1989 through an Exchange of Letters between the Foreign Minister of Indonesia and Chairman of the 23rd ASEAN Standing Committee (ASC), H.E. Mr. Ali Alatas and then Foreign Minister of the ROK, H.E. Mr. Choi Ho Joong. Subsequently, the ASEAN-ROK Joint Sectoral Cooperation Committee (JSCC) was established as an inter-governmental consultative body to facilitate and promote the cooperation, which initially was confined to the areas of trade, investment and tourism. The JSCC met in Jakarta in 1990 and in Seoul in 1991 to discuss cooperation projects in these three areas.
The ASEAN-ROK Special Cooperation Fund (SCF) was established in 1990 and an ASEAN-ROK Joint Management Committee was formed to manage the SCF.
Elevation to Full Dialogue Partner Status
The ROK was elevated to full Dialogue Partner status at the 24th ASEAN Ministerial Meeting (AMM) in July 1991 in Kuala Lumpur. Dialogue meetings are held at the level of ASEAN’s Directors-General and the ROK’s Vice Minister of Foreign Affairs at regular intervals. Since the elevation of the ROK to full Dialogue Partner status, five ASEAN-ROK Dialogue meetings have been held.
All the ASEAN-ROK Dialogue Meetings held so far have consistently discussed ways of enhancing ASEAN-ROK economic and trade relations, in addition to project-related topics. The 5th ASEAN-ROK Dialogue held in March 2001 marked the first meeting wherein ASEAN and the ROK exchanged views on political and security issues in the region.
Structural Mechanisms
As a Dialogue Partner, the ROK has been participating in several meetings with ASEAN, which include the ASEAN Regional Forum (ARF), ASEAN-ROK Dialogue Meeting, Post Ministerial Conferences (PMC) ASEAN +10, PMC ASEAN-ROK. These ministerial meetings offer an opportunity for the ROK Foreign Minister to take an active part in the review of current political, security, economic and development cooperation issues affecting the Asia-Pacific region, as well as in the discussion with ASEAN Foreign Ministers on ASEAN-ROK cooperation. The ROK has been an active participant in the ARF. In 2000-2001, the ROK and Malaysia co-chaired the ARF’s Inter-Sessional Support Group on Confidence Building Measures (ISG-CBM), which takes stock of key regional political and security issues that concerns the region. The ROK's active participation in the ARF and the PMC process demonstrates the country’s commitments to cooperating with ASEAN and like-minded countries in strengthening peace and stability in the region, and in broadening the scope of the dialogue relations with ASEAN to include political and security issues affecting East Asia and the world.
ASEAN-ROK Summits and ASEAN + 3
At the apex of the dialogue process is ROK’s participation in the ASEAN-ROK Summits and the ASEAN+3 (China, Japan and the ROK) which provide the ASEAN and Korean Leaders with the opportunity to exchange views on issues relating to cooperation in ASEAN-ROK relations and East Asia annually.
The ASEAN+3 process is expanding steadily. Now it includes the meetings of senior officials and ministers in the following areas: finance, economic and trade, foreign affairs, labour. Ministerial meetings on agriculture and forestry, and on the environment will soon be convened. Other forums for meeting on the +3 level are also being considered.
H.E. President Kim Dae Jung is undoubtedly a leading champion of closer East Asia cooperation. Responding to his initiative, the ASEAN+3 Summit in Ha Noi in 1998 established the East Asia Vision Group (EAVG) to consider and recommends bold ideas for the future of East Asia cooperation. The EAVG's Report and Recommendations will soon be submitted to all Leaders of ASEAN+3 and the Report will be discussed at the forthcoming ASEAN+3 Summit in Brunei on 5 November 2001.
In addition, the ASEAN+3 Summit in Singapore last November, again responding to H.E. President Kim Dae Jung’s initiative, established the East Asia Study Group (EASG), consisting of ASEAN Secretary-General, Senior Officials (SOM Leaders) of ASEAN Member Countries, China, Japan and the ROK, to assess the recommendations of the EAVG and to explore the idea and implication of the evolution of the ASEAN+3 Summit into an East Asia Summit. The EASG has a working group consisting of ASEAN Directors-Generals and officials at comparable level from China, Japan and the ROK and a representative of the ASEAN Secretariat. The EASG is tasked to assess the recommendations of the EAVG and to submit its interim report to the ASEAN+3 Summit in Brunei Darussalam on 5 November 2001 and its final report to the ASEAN+3 Summit in Cambodia in 2002.
Political Cooperation
The ROK supports ASEAN efforts to establish a Zone of Peace, Freedom and Neutrality (ZOPFAN) and a nuclear weapon-free zone in Southeast Asia. The ROK also supports ASEAN to be the driving force of the ARF. The ROK has also demonstrated its interest in strengthening cooperation with ASEAN on the issue of global disarmament and to promote their mutual interests through close consultations. The recent inclusion of political and security matters under the ASEAN-ROK Dialogue meetings is a manifestation of closer cooperation with ASEAN. ASEAN, on the other hand, supports H.E. President Kim Dae Jung’s “Sunshine” policy on normalization of relations between the ROK and the Democratic People’s Republic of Korea (DPRK). ASEAN and the ROK, among others, welcomed the participation of the DPRK in the ARF, starting at the Seventh ARF in Bangkok on 27 July 2000.
Economic Cooperation
Trade
Economic and trade relations between ASEAN and the ROK have been growing rapidly in recent years. From 1988 to 1996, Korea’s bilateral trade with ASEAN increased by an average of 22 percent annually, but decreased in 1998 as a cause of the financial crisis. Although the adverse effects of the financial crisis are not yet over, ASEAN started to show a positive growth. One of the indicators is the beginning of the escalating economy that is shown by a high increase in the trade’s quality. This tendency can be seen from the intra ASEAN trade, with import values reaching to US$ 77.6 billion in 2000 and brought 27.0% growth rate compared to US$ 61.1 billion in 1999. Intra ASEAN export increased slightly below import, 26.3% from US$77.5 billion in 1999 to US$97.8 billion in 2000.
As an effect of the financial crisis, bilateral trade between ASEAN and ROK decreased from US$ 25.6 billion in 1997 to US$17.1 billion in 1998. Subsequently, ASEAN experienced unusual trade growth rate with ROK such as 33.1% negative growth in year 1998. However, for the following years, the bilateral trade have recovered by achieving the average growth of 29.5% during the year 1998 and 2000. The increasing trade percentage between ASEAN-ROK was greater than intra ASEAN trade which grown averaging 15.1% during the same period 1998 and 2000.
Import from ROK rose 19.5% from US$ 12.11 billion in 1999 to US$14.47 billion in 2000, while ASEAN export volume increased by 29.4% to US$ 14.1 billion from only US$10.9 billion in 1999. Although ASEAN’s exports to ROK increased at the higher rate than its imports, from the value perspective, ASEAN still experienced a deficit in its level of trade with ROK.
Investment
The pattern of FDI in ASEAN before and in the immediate post-crisis period has changed slightly. Five main sources accounted for 86 percent of the total net FDI flows of US $112 billion to ASEAN in 1995-1997. In 1995-1999, 71 percent of the total net FDI flows to ASEAN were accounted for by 10 major FDI source countries, including the Republic of Korea (ROK), or 76 percent by the 5 main regional sources. The latter are the EU, Japan, North America, the Asian Newly Industrialising Economies and intra-ASEAN.
The pattern of FDI flows to ASEAN in 1999 has changed markedly by different source countries. The investment opportunities in ASEAN, brought about by the crisis and cheaper asset prices, may have partly contributed to this alteration. For example, it may be that investors from some FDI source countries are in a better position to take advantage of the crisis-related investment opportunities in ASEAN. On the other hand, some major FDI source countries affected by the Asian financial crisis, which has considerably weakened the financial position of their private sector, experienced a marked decline in their outward FDI flow to the ASEAN region and elsewhere in the world. This includes ROK with declining FDI flows to the ASEAN region in the past few years.
ROK is a major investor in ASEAN. This is particularly true between 1980s and up to the first half of the 1990s. The high labour and rental costs in ROK, the appreciation of the won following the Plaza Accord and a significant current account surplus provided the impetus and “push” factor for Korean firms to invest abroad. The comparative cost advantage of ASEAN, the investment opportunities, regional integration process, geographical proximity and cultural affinity have also played an important role in “pulling” in ROK FDI to the region at the time when Korean firms have to operate abroad to maintain competitiveness.
Despite the recent declining trend of ROK FDI to ASEAN, ROK is the 10th largest investor in the region in the period 1995-1999, with an accumulated amount of US $3.2 billion. This represented a 3% share of the total net FDI flow in all sector in the period. Approved manufacturing projects from Korea in ASEAN declined significantly from about US$2.3 billion in 1997 to US$248 million in 1998. In 1999, however, Korean approved manufacturing projects in ASEAN increased by 9% to the level of US$271 million. ROK is recovering from the crisis and with the restructuring programme currently undertaken, stronger FDI from ROK in the ASEAN region can be expected.
Development Cooperation
Areas of Cooperation
ASEAN and the ROK sectoral dialogue relations focused on cooperation in the areas of trade, investment and tourism. With the ROK's elevation to a full dialogue partner, cooperation between ASEAN and the ROK was expanded to include science and technology and human resource development. At the ASEAN-ROK Summit in December 1997, the ASEAN and ROK Leaders agreed that in view of the increasing importance of the relationship, the scope of the dialogue agenda should be widened to include environment and culture.
At the ASEAN ROK Summit in 1999, President Kim Dae Jung indicated Korea's support for the Hanoi Plan of Action. At the ASEAN+3 Summit of the same year, President Kim Dae-Jung proposed cooperation in the areas of private sector, alleviation of socio-economic disparities among the East-Asian countries through cooperation in IT, science and technology transfer, emergency relief in times of disaster and the review of ways for the medium and long-term promotion of an East Asia Economic Cooperation System. At the ASEAN-ROK Summit in 2000, underscored the importance of HRD and development in IT, cultural exchange, the environment and bridging economic disparities.
The 5th ASEAN-ROK Dialogue (March 2001) adopted the JPRC–recommended Work Program for 2001-2003, which covered the areas of environment, transport, science and technology, tourism and strengthening the ASEAN Secretariat. In addition to these areas, the ROK affirmed that it would provide assistance in the following areas, which have been identified as priority areas during the 4th ASEAN Informal Summit in November 2000 by the ASEAN and ROK Leaders, through a mechanism that would be independent of the ASEAN-ROK Special Cooperation Fund: information technology, human resource development, cultural exchanges, medical assistance and Mekong Basin development cooperation.
Project Management
The ASEAN-ROK Joint Management Committee (JMC) was formed to manage the ASEAN-ROK Special Cooperation Fund (SCF) and to monitor the projects supported by the ASEAN-ROK SCF.
The ASEAN-ROK JMC continued to support the ASEAN-ROK dialogue until May 1998, when it was discontinued and replaced by the ASEAN-ROK Joint Planning and Review Committee (JPRC) in the same year.
The Inaugural Meeting of the ASEAN-ROK JPRC was held in April 1999. Since its inaugural meeting, the ASEAN-ROK JPRC has been focusing its efforts at rationalizing the mechanism for ASEAN-ROK development cooperation within the ASEAN-ROK Dialogue framework and in planning, reviewing and managing all aspects of the ASEAN-ROK development cooperation.
Two other meetings of the ASEAN-ROK JPRC have been held since its inauguration. The most recent, the 3rd Meeting of the ASEAN-ROK JPRC, was held in 27-28 February 2001. The ASEAN-ROK JPRC meetings have consistently upheld the priorities agreed upon by the 4th ASEAN-ROK Dialogue Meeting while maintaining the flexibility to incorporate new priorities arising from the ASEAN and ROK Leaders' statements.
In more recent years, the ASEAN-ROK dialogue has witnessed a conscious effort to streamline its project approval procedures, the most notable of which is the assignment of a core group comprising the Country Coordinator for ASEAN-ROK cooperation, the ROK and the ASEAN Secretariat to oversee the projects under the dialogue. The 3rd ASEAN-ROK JPRC discussed ways to further streamline the project review and approval process, implement the projects more efficiently and to update the guidelines in order to reflect these improvements.
In the pursuit of greater impact for projects under the of ASEAN-ROK Dialogue, ASEAN and the ROK have initiated the concept of Flagship Projects. At the recent 3rd ASEAN-ROK Joint Planning and Review Committee (JPRC) meeting, ASEAN and the ROK agreed to accord higher priority to multi-year projects that have more impact and greater sustainability.
Funding Mechanism
ASEAN and the ROK have jointly implemented programmes in all the areas of cooperation identified under the dialogue. These development cooperation programmes are supported by two funds held in trust at the ASEAN Secretariat, namely: a) ASEAN-ROK Special Cooperation Fund (SCF) ; and b) ASEAN-ROK Future Oriented Cooperation Program Fund (FOCP).
As of November 2001, the ROK has contributed US$16,762,001.75 to the ASEAN-ROK SCF and US$ 5,000,000 to the ASEAN-ROK FOCP.
As of November 2001, SCF funds amounting to approximately US$ 12 million have been mobilized to support 82 completed projects as well as some ongoing projects and three special activities, in the form of meetings of the JPRC.
Of the amounts disbursed from the ROK funds, US4,405,516.00 were for 31 projects implemented between the period January 1999 to June 2001 in support of the Hanoi Plan of Action, making ROK the second largest contributor to the HPA.
The responsiveness of the ASEAN-ROK dialogue to the mutual needs of the two partners is reflected in the impressive list of new project initiatives from both sides. Barely on to the second quarter of the year 2001, there are already strong indications that the request for support under the SCF will far outweigh those of other years.
The synergy to be gained from procedural improvements and substantive improvements through the pursuit of multi-year projects with higher impact and greater sustainability will no doubt contribute significantly to the deepening and intensification of the ASEAN-ROK dialogue.
Current ASEAN-ROK Relationship
The 6th ASEAN-ROK Dialogue was held from 30 April 2002 to 1 May 2002. At the meeting, both sides reaffirmed their cooperation in a wide range of sectors, including human resource development, highways development and forest management. The ROK extended support to the ASEAN Secretariat in building up its IT capability.
ASEAN and the ROK cooperation has accorded high priority to projects in the areas of economic, financial, and trade cooperation; facilitating ASEAN regional economic integration, particularly on HRD and ICT; bridging the development gap between the older and newer member states; establishing knowledge-based societies; and sharing of experiences in bridging the digital divide amongst and within countries.
Recent years have witnessed a significant increase of tourists Korea to Southeast Asia. With a view to further enhancing tourist flows, the people-to-people exchange programs will be continued, with emphasis on cultural fellowship exchange, focusing on the broadcast, movie, and music industries.
