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Korea’s Asean strategy needs a reset

Published: 05 Mar. 2025, 00:01

Ko Young-kyung

The author is a research professor at Yonsei University Graduate School of International Studies.

The recent breakdown of talks between U.S. President Donald Trump and Ukrainian President Volodymyr Zelensky underscored a shifting global order in which traditional alliances are fading, leaving economic transactions as the primary currency of diplomacy. Trump’s “America First” policy has gone beyond merely separating from Europe and seeking rapprochement with Russia; it has eroded the values-based alliances that the United States once championed. As major powers redefine their relationships in this new reality — where there are no permanent friends or enemies, only strategic interests — Asean has secured a unique geopolitical position. As a critical node linking Northeast Asia with the Indo-Pacific region, it enjoys relative geopolitical stability, being largely removed from direct military tensions between major powers.

Asean’s stability has translated into economic opportunity as global supply chains undergo restructuring. The U.S.-China trade war, the Covid-19 pandemic and Ukraine's ongoing war against Russia conflict have fueled Asean’s rise as an alternative production hub. U.S. foreign direct investment in Asean surged from $29.1 billion in 2017 to $74.4 billion in 2023, while Asean’s exports to the United States more than doubled, reaching $291 billion in 2022 and pushing the region to overtake China as America’s top export destination. This trend has continued into 2024, with exports to the U.S. from Vietnam (23.4 percent), Malaysia (23.2 percent), Indonesia (19.2 percent), and Thailand (13.7 percent) all growing at double-digit rates.

Asean’s strategic importance in the semiconductor sector

A key driver of Asean’s export growth has been the electronics sector, particularly semiconductors. Global giants such as Samsung Electronics, iPhone manufacturer Foxconn, Intel and Infineon have set up operations in the region alongside local enterprises. This shift in trade patterns has created a new dynamic: While Asean’s exports to the U.S. are soaring, its imports of intermediate goods from China are also rising, deepening trade deficits with Beijing. This underscores how economic interdependence and trade balances within the region are being reconfigured.

For years, Japan, China and the European Union have engaged in fierce strategic competition in Asean. Japan has leveraged its official development assistance (ODA) and its network of more than 15,000 companies in the region to promote a green transformation strategy focused on sustainable infrastructure. China has pursued its Belt and Road Initiative to invest in infrastructure and resource extraction, while the EU has committed 10 billion euros ($6.8 million) to green energy, transportation and digital connectivity.

Despite Asean being Korea’s third-largest trading partner and home to its largest overseas business footprint, Seoul has lacked a consistent strategic approach. The Moon Jae-in administration’s New Southern Policy sought to elevate Asean as a key strategic partner, but under the current government, Asean has been relegated to a subordinate element of the broader Indo-Pacific strategy. While the Yoon Suk Yeol administration has introduced the Korea-Asean Solidarity Initiative, it has failed to gain meaningful traction. More than 120 cooperative programs are currently underway, but without a comprehensive framework to coordinate them, their impact remains limited.

A five-point plan for Korea-Asean engagement

Korea can no longer afford to delay the development of a coherent Asean strategy. It needs a new blueprint.

While Japan focuses on green transitions, China on infrastructure and technology, and the EU on sustainability and connectivity, Korea must craft a distinctive partnership model. By positioning itself as a leader in “technology orchestration for mutual growth,” Korea can harness its expertise in integrating various technological fields to create synergistic solutions tailored to Asean’s needs.

Japan has the Economic Research Institute for Asean and East Asia, and China operates the Asean+3 Macroeconomic Research Office. Korea must either establish or reinforce its own think tank within Asean to foster long-term policy cooperation. While the Korea-Asean Center was created for bilateral engagement, it does not function as a policy research institute. A platform that connects policy research with execution is essential.

Asean is a diverse region with vast economic, social and political differences. A one-size-fits-all strategy will not work. Korea must go beyond simply offering advanced technology or trending industries; it must identify the intersection between Asean’s specific challenges and Korea’s capabilities. True synergy emerges when Korea provides solutions that align with Asean’s real needs rather than just responding to expressed demands.

Facing formidable competitors with strong state-industry coordination, Korea must adopt an integrated approach. The government, businesses, and financial institutions should collaborate in a unified strategy. ODA programs should be designed not only as aid, but also as investments that foster long-term market expansion for Korean companies, enhancing their competitiveness in the region.

One of Asean’s biggest barriers to innovation is a shortage of skilled professionals. Korea should expand opportunities for technical and vocational training in Asean while also opening pathways for top talent from the region to pursue advanced degrees and professional careers in Korea. Despite the growing number of STEM graduates from Southeast Asia, many face difficulties finding employment in Korea. Enhancing human capital exchange should be a cornerstone of Korea-Asean cooperation.

While Korea has been slow to deepen its engagement with Asean, China and Japan have aggressively expanded their influence. The strategic vacuum left by the United States has further intensified competition between China, Japan, and the EU while simultaneously strengthening Asean’s bargaining power and regional influence.

In a world where power dynamics dictate international relations, both Korea and Asean recognize the need for deeper cooperation. But for collaboration to be effective and sustainable, Korea must acknowledge the shifting landscape and build a new model of engagement. The time to act is now.

Translated using generative AI and edited by Korea JoongAng Daily staff.