[KH Finance Forum] Korea-ASEAN’s strong ties to offer new opportunities for financial firms

Efforts should be made to support Korean financial companies’ entry to Southeast Asian markets to secure sustainable future growth and foster stronger financial ties, a senior researcher said Wednesday.

The country’s financial competitiveness along with the development of its economy has grown at large, and it is the time for the local financial industry to seek new opportunities by bolstering economic cooperation with Southeast Asia, said Jeong Young-sik, senior researcher for international finance at the Korea Institute for International Economic Policy, at The Korea Herald Finance Forum held Wednesday at The Shilla Seoul.

Amid many countries around the globe facing crises, the local financial firms have opened 154 overseas offices in Association of Southeast Asian Nations members such as Vietnam, Indonesia and Myanmar, as of end-June this year. The accumulated figure is about 34.9 percent of the total number of Korea’s offices abroad, the researcher said, while stressing the importance of financial business in the Southeast Asian region.

“As Korea is looking for a win-win cooperation with ASEAN, we have chosen six core partners among 10 nations in the region -- Indonesia, Vietnam, Thailand, Myanmar, Cambodia and Laos -- considering the size of economies, frequency of economies’ exchange with Korea and levels of financial development,” he said.

“Some countries have relatively bigger size of economies and their economic exchange with Korea is fairly active. They also have high demand in financial infrastructure and financial cooperation with us. It is not only to offer new growth engines opportunities to the local financial institutions, but also to provide bases of financial market and its development for ASEAN.”

By industry, offices related to indirect financing such as banking and credit financing came in at more than 61 percent, while they have newly opened 18 offices and 22 offices, respectively, in the region from the end of 2014 to end-June this year. and brokerages and insurance marked 24 percent and 13.6 percent, respectively, up by seven offices and one office, during the period.

The expert attributed the rapid expanding of overseas business in the ASEAN bloc to various factors such as local market saturation, the ultralow interest rate environment, the region’s high-growth trend with high growth potential, along with New Southern Policy -- a key pillar seeking to diversify the country’s growth scenario.

President Moon Jae-in initiated the New Southern Policy in 2017, aiming at deepening ties with Southeast Asia as part of Korea’s drive to widen its diplomatic horizons and curb reliance on neighboring countries in terms of trade and security. Under the policy, the 10-member ASEAN bloc became Seoul’s second biggest trading partner at $151.3 billion, along with being the second biggest investing destination with $95.5 million as of last year.

“The Moon administration is set to announce ways to upgrade the NSP in the near future, considering the recent environment changes both in and out Korea,” Jeong said. “To bolster financial cooperation between the nations, we’re looking forward to opening a Korea-ASEAN financial cooperation center in the first half of next year. It is likely to be opened in Jakarta, Indonesia to play a key role in financial infrastructure cooperation.”

By Jie Ye-eun (yeeun@heraldcorp.com)