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Korea Eyeing SE Asia for Energy Resources

Posted May. 04, 2009 07:56,   


“Advance into CLV, an alternative to the post-China era!”

Countries are increasingly setting their sights on Southeast Asian countries in preparation for the era in which China loses its attraction as a base for manufacturing and a consumer market.

The Korean government and companies are paying close attention to “CLV,” namely Cambodia, Laos, and Vietnam. The three countries offer more investment opportunities than Thailand and Singapore, where advanced economies have gained the upper hand. In addition, Cambodia, Laos and Vietnam have shown interest in learning from Korea’s experience of achieving rapid economic development over a short period of time.

Korea’s summit with the Association of Southeast Asian Nations slated for early next month is also fueling growing interest in the three countries.

○ Edge in energy trade

Energy resources will play a key role in trade relations between Korean and CLV. As of May last year, oil products made up the largest share of outbound shipments to ASEAN nations. Energy resource-related items such as natural gas, crude oil and petroleum took up the second to fourth-largest shares of imported products from the three countries. Korea imports resources from CLV and processes them for re-export to the same countries.

The Knowledge and Economy Ministry in Seoul will dispatch “energy resources delegates” to CLV to boost energy trade. A ministry official said, “Cambodia, Laos and Vietnam have been shunned by advanced countries because of political instability, though they have vast energy resources.”

“Now that the countries have achieved political stability, we should waste no time in making inroads into them to gain an early edge.”

GS Caltex is seeking business opportunities in Cambodia, though the country’s prospects for becoming a resource development country remain uncertain. Hoping to produce visible results after 2013, however, the company is carrying out oil field explorations there.

In Laos, which is in the process of transforming from an agrarian country into a mineral powerhouse, small and mid-size Korean companies are participating in exploration projects after winning development permits from the country.

Cheap labor in Cambodia, Laos and Vietnam is another attraction for companies. Vietnamese and Indonesian workers earn one tenth of the wages of those in Chinese.

○ Know-how for rapid economic growth

China and Japan have also joined the race to advance into CLV, especially China. Building on what ethnic Chinese have achieved there, Asia’s second-largest economy is expanding its influence.

Japan has been expanding investment in the region centering on Vietnam.

Experts say Korea can beat China and Japan in Cambodia, Laos and Vietnam by utilizing its know-how accumulated from achieving rapid economic growth. The three Southeast Asian countries are relatively backward in economy, and are eager to follow Korea’s example.

Korea has begun full-fledged government and civil cooperation to teach Korean know-how to the construction, textile and machinery sectors of the three Southeast Asian countries. The Small Business Corporation of Korea is running programs to train personnel and the Korea Rural Corporation is instructing Cambodian farmers on agricultural technology.

A ministry official said, “Vietnam admires Korea for achieving fast growth over the short period of 30 years and seeks to take a page out of Korea’s book.”