By Song Kyung-jin
The Republic of Korea-the United States summit was held May 21, a day before the 139th anniversary of bilateral diplomatic relations. Aimed at strengthening the long-time alliance and bilateral cooperation for the future on all fronts, the bilateral summit also paved the way for a strong free, open and inclusive Indo-Pacific rapidly becoming the center of global geopolitics, geo-economics and geo-strategy.
Toward that end, the two leaders agreed to expand Korea's role beyond the peninsula into the Indo-Pacific and the world. It is in fact not just the two leaders' aspiration but that of the world for Korea to re-engage more actively in global affairs as it did before under the banner of "Global Korea."
The two countries agreed to closely cooperate on a wide range of infrastructure programs, including the KORUS Global Vaccine Partnership, water and waste management, energy security, enhanced digital capacity, 5G and 6G, climate, health, and education. Central to this infrastructure cooperation is the Indo-Pacific with ASEAN centrality, by aligning the Korea's New Southern Policy (NPS) and the US vision for a free and open Indo-Pacific, in particular. It is indeed a step in the right direction.
Despite being the most populous region and accounting for 60 percent of the global gross domestic product, the Indo-Pacific has been suffering from perennial infrastructure financing deficits, failing to meet the infrastructure demand to support growth. According to the estimate of the Asian Development Bank (ADB) in 2017, the funding need for infrastructure in Asia's developing countries would be $1.34 trillion per year from 2016 until 2030; however, the actual amount the developing Asia spends is only about $881 billion per year.
Quickly aware of this gap was China that seized the opportunity for infrastructure diplomacy. It pressed ahead with the Belt and Road Initiative (BRI) and later led the establishment of the Asian Infrastructure Investment Bank (AIIB). Through the BRI, China invested around $25 billion in Asia last year alone. Many developing countries in the Indo-Pacific in dire need of funding have welcomed China's loan assistance, despite the alleged risk of debt traps. Cambodian Prime Minister Hun Sen's remark at a recent international forum, "China is a great help. Where else can we find such help?," is a testament to it.
Nonetheless, China alone cannot meet the infrastructure demand in the region. And the countries in the region have the responsibility to make the infrastructure investment accountable, transparent, free of coercion and debt traps, and align with the rules-based order.
Such a backdrop, while effectively turning the Indo-Pacific into a test-bed for ensuring the rules-based international order, calls for a natural partner ― Korea, for its non-threatening leadership and coordination.
Korea is a democracy with a fairly recent development success story, and it respects the rules-based international order. It thus can relate with the developing Indo-Pacific better than its western counterparts.
Also, it was Korea that brought development into the multilateral G20 agenda in 2010 with nine pillars including infrastructure and governance, and so on. So, it was dubbed a "Korea initiative" or the "Seoul Development Initiative" then. While the objectives of NPS built on the Seoul initiative are laudable, it failed to succeed multilateralism enshrined in it. Going bilateral with limited resources is difficult to sustain; therefore, it should diversify into pluri-lateral and multilateral programs with like-minded partners. The same is true of Korea's other ASEAN initiatives.
ASEAN has become critically important on Korea's economic and diplomatic fronts in its endeavor to reduce its dependence on China. As a consequence, ASEAN now is Korea's second largest trading partner with a trading volume of $153.4 billion as of 2019, only next to China. It is Korea's third largest investment destination next to the US and EU, with $9.54 billion in 2019. It is also Korea's largest overseas construction market, growing to $8 billion in total orders in 2019.
Pension funds with deep pockets can set a good example as a long-term investor. There is a lack of long-term investors, public or private, in the region due to various reasons, such as the regional savings invested elsewhere including in the US Treasuries and the regulatory constraints. Korea's National Pension Fund, world's third largest, can and should make more and bolder investments in infrastructure bilaterally and multilaterally. Multilateral development banks such as the ADB, the World Bank and even the AIIB are good partners to work with. Alarmists may instantly flash a yellow card to the idea of inviting the AIIB. But they should not forget that the region needs to pool resources available as far as possible and that the AIIB is not China-owned but a multilateral organization run by experts of diverse nationalities.
Korea's infrastructure engagement in the Indo-Pacific is good for making a stronger Indo-Pacific and enhancing its image as a credible, balanced partner in the region and the world.
Dr. Song Kyung-jin (kj_song@hotmail.com) led the Institute for Global Economics (IGE), based in Seoul, and served as special adviser to the chairman of the Presidential Committee for the Seoul G20 Summit in the Office of the President. Now, she chairs the international cooperation committee called the Innovative Economy Forum.
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Toward that end, the two leaders agreed to expand Korea's role beyond the peninsula into the Indo-Pacific and the world. It is in fact not just the two leaders' aspiration but that of the world for Korea to re-engage more actively in global affairs as it did before under the banner of "Global Korea."
The two countries agreed to closely cooperate on a wide range of infrastructure programs, including the KORUS Global Vaccine Partnership, water and waste management, energy security, enhanced digital capacity, 5G and 6G, climate, health, and education. Central to this infrastructure cooperation is the Indo-Pacific with ASEAN centrality, by aligning the Korea's New Southern Policy (NPS) and the US vision for a free and open Indo-Pacific, in particular. It is indeed a step in the right direction.
Despite being the most populous region and accounting for 60 percent of the global gross domestic product, the Indo-Pacific has been suffering from perennial infrastructure financing deficits, failing to meet the infrastructure demand to support growth. According to the estimate of the Asian Development Bank (ADB) in 2017, the funding need for infrastructure in Asia's developing countries would be $1.34 trillion per year from 2016 until 2030; however, the actual amount the developing Asia spends is only about $881 billion per year.
Quickly aware of this gap was China that seized the opportunity for infrastructure diplomacy. It pressed ahead with the Belt and Road Initiative (BRI) and later led the establishment of the Asian Infrastructure Investment Bank (AIIB). Through the BRI, China invested around $25 billion in Asia last year alone. Many developing countries in the Indo-Pacific in dire need of funding have welcomed China's loan assistance, despite the alleged risk of debt traps. Cambodian Prime Minister Hun Sen's remark at a recent international forum, "China is a great help. Where else can we find such help?," is a testament to it.
Nonetheless, China alone cannot meet the infrastructure demand in the region. And the countries in the region have the responsibility to make the infrastructure investment accountable, transparent, free of coercion and debt traps, and align with the rules-based order.
Such a backdrop, while effectively turning the Indo-Pacific into a test-bed for ensuring the rules-based international order, calls for a natural partner ― Korea, for its non-threatening leadership and coordination.
Korea is a democracy with a fairly recent development success story, and it respects the rules-based international order. It thus can relate with the developing Indo-Pacific better than its western counterparts.
Also, it was Korea that brought development into the multilateral G20 agenda in 2010 with nine pillars including infrastructure and governance, and so on. So, it was dubbed a "Korea initiative" or the "Seoul Development Initiative" then. While the objectives of NPS built on the Seoul initiative are laudable, it failed to succeed multilateralism enshrined in it. Going bilateral with limited resources is difficult to sustain; therefore, it should diversify into pluri-lateral and multilateral programs with like-minded partners. The same is true of Korea's other ASEAN initiatives.
ASEAN has become critically important on Korea's economic and diplomatic fronts in its endeavor to reduce its dependence on China. As a consequence, ASEAN now is Korea's second largest trading partner with a trading volume of $153.4 billion as of 2019, only next to China. It is Korea's third largest investment destination next to the US and EU, with $9.54 billion in 2019. It is also Korea's largest overseas construction market, growing to $8 billion in total orders in 2019.
Pension funds with deep pockets can set a good example as a long-term investor. There is a lack of long-term investors, public or private, in the region due to various reasons, such as the regional savings invested elsewhere including in the US Treasuries and the regulatory constraints. Korea's National Pension Fund, world's third largest, can and should make more and bolder investments in infrastructure bilaterally and multilaterally. Multilateral development banks such as the ADB, the World Bank and even the AIIB are good partners to work with. Alarmists may instantly flash a yellow card to the idea of inviting the AIIB. But they should not forget that the region needs to pool resources available as far as possible and that the AIIB is not China-owned but a multilateral organization run by experts of diverse nationalities.
Korea's infrastructure engagement in the Indo-Pacific is good for making a stronger Indo-Pacific and enhancing its image as a credible, balanced partner in the region and the world.
Dr. Song Kyung-jin (kj_song@hotmail.com) led the Institute for Global Economics (IGE), based in Seoul, and served as special adviser to the chairman of the Presidential Committee for the Seoul G20 Summit in the Office of the President. Now, she chairs the international cooperation committee called the Innovative Economy Forum.
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