Phnom Penh: The South Korean government plans to double development assistance to six ASEAN countries including Cambodia by 2023, according to South Korea’s overseas aid agency (KOICA).
KOICA will increase total funding aid to Cambodia, Laos, Myanmar, Vietnam, Indonesia and Philippines to $151 million by 2023 as part of its “New Southern Policy,” an initiative to deepen diplomatic and economic relations with Southeast Asia and India.
“KOICA will increase the scale of development aid in ASEAN countries by 20 percent annually and advance the integration, effectiveness, and efficiency of aid through the collaboration with internal and external partners,” stated a release during an official visit by KOICA President Lee Mi-kyung to Vietnam to announce the policy’s updated figures.
South Korea contributed $632 million in development aid from 1996 to 2018, nearly half of it in the form assistance grants. The South Korean government also announced an additional $200 million in concessional loans to Cambodia that will be disbursed until 2023.
South Korea’s importance to economic development to Cambodia cannot be overstated. The country ranks second to China in foreign direct investments into the Kingdom. To date, the Cambodian government has approved 212 Korean investment projects worth $4.56 billion. Nearly 300 South Korean business firms operate in the Kingdom, employing thousands of people.
In March, South Korean President Moon Jae-in led a delegation of investors in a three-day state visit to the Kingdom.
“Cambodia is attracting larger amounts of foreign direct investment and it will be one of the most important markets for infrastructure projects in Asia in the next 10 years,” said President Moon at the Cambodia-Korea Business Summit held in Phnom Penh earlier this year. “Korean companies are increasingly expanding their investments and operations here.”
South Korea’s renewed focus on ASEAN comes as China has solidified its primacy in the region with massive foreign direct investments as part of its BRI initiative and concessional loans for infrastructure projects.
The economic outlook of East Asia continues to decline as the US-China trade war intensifies. Analysts expect a major downturn in the Chinese economy that will directly affect heavily-trade dependent nations like South Korea and accelerate the need to form a closer economic relationship with the ASEAN region.
ASEAN countries have a combined population of over 600 million people and a combined GDP of $2.4 trillion, making some analysts call the region the “new China.” The IMF predicts ASEAN to have the world’s fourth-largest economy by 2050.
“In light of recent developments at the international level, including the trade war between the US and China–and of Korea’s new ASEAN policy–I would like to encourage Koreans to come do business in Cambodia,” said Kith Meng, president of the Cambodia Chamber of Commerce (CCC), at the Cambodia-Korea Business Summit.