The ASEAN-Korea Center held a forum, “Korea’s contribution to ASEAN connectivity,” on Oct. 21 at the Convention Center of the Federation of Korean Industries as a platform to promote opportunities in Southeast Asia for Korean construction firms.

It was part of the “ASEAN connectivity” project, which aims to invigorate physical, institutional and social links across the 10-member Association for Southeast Asian Nations.

Tuesday’s conference, attended by high-level delegates from the ASEAN and Korean construction firms, shed light on various opportunities in infrastructure projects.

Philippine Ambassador Raul Hernandez, said in a keynote speech that building transport, energy, health care, education and information and communications technology infrastructures would help ASEAN find its way into the global chain of production and consumption.

“The benefits of increased physical connectivity are expected to reduce business transaction costs, facilitate travel across the region and distribute the fruits of growth evenly across its ‘core’ and ‘periphery,’” Hernandez said.

Billions of dollars’ worth of infrastructure projects are underway across the region. The Dawei Port Project in Myanmar’s Special Economic Zone is designed as a gateway to the East-West Economic Corridor, a massive transport-trade network connecting Myanmar, Thailand, Laos, Cambodia and Vietnam, which will link the Indian Ocean with the Pacific. The ASEAN Highway Network, the Singapore-Kunming Rail Link, the RORO Shipping Network Routes and the West Kalimantan-Sawarak Power Interconnection Project are the backbone of the 2015 master plan.

ASEAN, with over 600 million people and a combined gross domestic product of $2.3 trillion, has an annual economic growth rate of more than 5 percent. Foreign direct investment has poured in recent years, making it the next “growth engine” of the hyper-connected global economy.

The Asia Development Bank estimates that building physical infrastructure in the region by 2015 would require an investment of $600 billion. ASEAN has been seeking new ways to steer its public-private partnership projects by tapping the experience of “forerunners” such as Korea.

“Infrastructure development goes hand in hand with economic development because without it, you can’t ‘lube’ the dynamism of the economy,” Philippines Department of Trade and Industry Gov. Ponciano C. Manalo Jr. told The Korea Herald.

Manalo said the rate of growth in the Philippines has exceeded the projected demands for power and energy, putting heavy strains on its infrastructures. With a traditional agrarian economy, transporting farm produce to urban centers remains a hurdle, as only 18 percent of local roads are paved, he said. There are also existing challenges in upgrading larger travel infrastructure, such as airports, seaports and railways.

Manalo said his government planned to double its infrastructure budget from 2.5 percent of gross domestic product to 5 percent in 2016. It has also put a concerted effort into establishing the rule of law and transparency in the government-related projects.

“We had to get the trust back from investors and stakeholders that the system of free competition works. The bidding process is now carried on the basis of merit itself, and ‘questionable transactions’ and the ‘atmosphere of unpredictability’ have ceased to exist,” Manalo explained. “As a result, we have seen significant improvement in the state’s fiscal position, stocking $84 billion in the federal reserves.”

“Of course the government is always the enabler of this change, but we must not underestimate the resolve of the Filipino people to be part of this great transformation,” he added. 

Manalo said that Filipino citizens had toiled for a better life in their localities and witnessed the effects of what “good governance” can provide. As a result, they are demanding the government to provide the right kind of services and welfare.

The “efficient and strict” tax-collection system has provided additional revenue in the state coffers, he said. It has also created a common view that national economic development benefits citizens, and that they have a part to play in it.

Manalo praised the contribution of Korean companies ― Samsung, Hanjin, KEPCO, Hanhwa, Daewoo International, Daerim, among others ― which have not only brought business to the Philippines, but also initiated a wide range of corporate social responsibility programs. “Korean companies make a point of being involved in community-building through the education of their workforces, technology transfers, disease control and prevention, and disaster relief efforts,” Manalo said.

With Korean companies’ reputation for precision engineering, Manalo added, the aerospace and shipbuilding industries, as well as the markets for car manufacturing and sales, big data analytics and health care information management will be the next big opportunities for connecting the two countries.

Porametee Vimolsiri, deputy secretary-general of Thailand’s Office of National Economic and Social Development Board, said building infrastructure was a critical component of the Thai government’s sustainable development goals.

“Sustainable development entails a comprehensive strategy,” Vimolsiri said, adding that “People may think of sustainability (in terms of the) green environment only, but economic and social sustainability are equally important and interconnected.”

The Thai government ― against the backdrop of leadership changes and a deep political fault line splitting the country between the rich and the poor, the urban and the rural ― is undertaking economic and social reforms in a series of five-year plans, now in their 11th cycle. The plans allow the government to guide its long-term development objectives linked with administrative policies and actions.

One of the key initiatives of the Energy Ministry is to increase the share of renewable energies, he stressed. “Due to high logistical costs and CO2 emissions in transport, the government direction has changed from road to rail. But roads now account for 90 percent while the more efficient rail only 2 percent (of travel).”

“Most of the investments these days are channeled into Thailand not as a single destination, but as part of the larger ASEAN region or in connection with neighboring countries, such as Cambodia or Vietnam,” Vimolsiri said.

Thailand, considered the “developed” part of Southeast Asia, has a role to serve the rest of the ASEAN community through its land-transport route in the Mekong River, according to Vimolsiri. He also noted his government’s effort for the last 10 years to reduce development gaps between the neighboring countries such as Myanmar and Laos through logistical and financial support.

ASEAN-Korea relations have seen dramatic progress, with trade volume rocketing in the last 24 years to over $135 billion from a mere $8 billion. In the first half of 2014, ASEAN was Korea’s second-largest trading partner at $71 billion, after China at $113 billion. According to Korea EximBank figures, the level of foreign direct investment by Korean companies in ASEAN secured top place at $2.3 billion, followed by $1.9 billion in the U.S. and $1.6 billion in China.

The ASEAN-Korea Center said the traditional areas of collaboration in business have spread to issues of worldwide concern: climate change, pandemic prevention, cybercrime deterrence, nuclear nonproliferation, food and energy security, and disaster relief. The immense popularity of Korean pop-culture in Southeast Asia has greased the wheels of trade and bolstered cultural ties.

ASEAN-Korea diplomatic relations were elevated to a “strategic partnership” in 2010, and political and military cooperation is currently being discussed. ASEAN has upheld Korea’s “trustpolitik,” a peace initiative that seeks inter-Korean reconciliation, as well as the “Northeast Asia Peace and Cooperation Initiative.” The experience of reform and opening up by the former Communist economies of Vietnam, Myanmar and Laos offers a litmus test of what future holds for North Korea’s liberalization, analysts say.

The hallmark venue, “Korea-ASEAN Commemorative Summit,” will be held at Busan Exhibition and Convention Center on Dec. 11 and 12.

By Joel Lee (joel@heraldcorp.com)