South Korean President Enhances Bilateral Economic Ties with Myanmar
By Nan Lwin 3 September 2019
YANGON- The president of South Korea pledged to accelerate Korea’s economic presence and to cooperate on development in Myanmar after meeting with the Myanmar State Counselor in Naypyitaw on Tuesday. The trip is a part of his “New Southern Policy” to deepen relations with Southeast Asian nations, including in the economic realm.
Moon Jae-in arrived Myanmar’s capital of Naypyitaw on Tuesday morning after beginning a six-day tour of the region on Sunday to build closer ties with Southeast Asian countries ahead of a special meeting with ASEAN member states in November.
In Naypyitaw, the Korean President met with his Myanmar counterpart U Win Myint and State Counselor Daw Aung San Suu Kyi. Five MOUs and one framework agreement, focused mostly on investment between two countries, were signed.
As part of its flagship policy, Myanmar is one of Korea’s focus countries. Moon highlighted a Korea Myanmar industrial complex project and said the project is ‘a signature cooperation’ between the two countries that will accelerate Korean companies’ investment in Myanmar and significantly contribute to economic growth.
A one-stop service center will be set up in the industrial complex. Moon said “we will encourage further investment” [in the industrial complex] during the press conference in Naypyitaw on Tuesday.
Moon added that the one-stop service will encourage investment for incoming Korean investors.
Korea and Myanmar have agreed to establish the $110-million-worth (166.2 billion kyats) Korea-Myanmar Industrial Complex (KMIC) in Hlegu, north of Yangon. Around 200 Korean companies are expected to invest in the production facilities, which will generate a projected $10 million in taxes annually.
On Wednesday, Moon will attend the KMIC inauguration ceremony and the Myanmar-Korea Economic Cooperation Forum in Yangon.
Mostly focused on boosting investment and trade between the two countries, Moon Jae-in’s stop in Myanmar is the first from a president of an Asian economic powerhouse looking to benefit from Myanmar’s economic potential. While Korea is seeking to strengthen its policy, Myanmar’s strategic location between China and India and its abundance of natural resources are major attractions for South Korea.
During the meeting, the two countries discussed cooperating on plans for “sustainable win-win growth” for both nations, including “systemic” support for encouraging more South Korean firms to do business in Myanmar.
The two signed five memorandums of understanding (MOUs) on Tuesday on trade and industrial cooperation; the establishment of Korea Desk in Myanmar—a one-stop service center to aid incoming Korean investors with any administrative issue; cooperation in shipping, shipyard upgrades, logistics and port development and management; science and technological cooperation; fields startups and innovation; and a framework agreement concerning loans from the Economic Development Cooperation Fund (EDCF) from 2018 through 2022, with Korea offering $100 million to support the economic development of Myanmar.
State Counselor Daw Aung San Suu Kyi said, “Trade has increased between the two countries and we are taking every step possible to enhance Korean investment in this country.”
President Moon Jae-In and U Win Myint had fruitful and friendly discussions earlier today, and also had bilateral meetings which covered a whole wide range of topics, she said.
Just two days before Moon’s visit to Myanmar, Korean media reported that, according to the Financial Supervisory Service (FSS), Myanmar has emerged as the most popular destination for Korean financial firms.
Korean media reported that representatives from seven banks accompanied Moon to Myanmar: Korea Federation of Banks Chairman and CEO Kim Tae-young, Industrial Bank of Korea (IBK) Chairman Kim Do-jin, Korea Export-Import Bank (Exim bank) Deputy President Kang Seung-joong, Shinhan Bank CEO Jin Ok-dong, KB Kookmin Bank CEO Hur Yin, KEB Hana Bank CEO Ji Sung-kyoo and Woori Financial Group Chairman Sohn Tae-seung.
Kim Do-jin of IBK said he would meet officials of the Central Bank of Myanmar to discuss his company’s plan to transform its Yangon office. IBK is set to sign an MOUon Wednesday with SME-Development Bank to strengthen cooperation on developing Myanmar SMEs.
Moon said both sides agreed to accelerate prosperity and active cooperation in the field of development.
The Korean government has been helping rural community development projects in Myanmar.
Moon said cooperation on development project have become “a shining example” of mutually beneficial bilateral cooperation for other countries.
Both sides discussed further strengthening the development of projects and expanding environmental cooperation, including cultivating technicians, scholarship programs and assistance with school buses, Moon said.
During the visit, Korea also donated 60 school buses to Myanmar.
Economic Linkages Between Two Countries
Economic reform is a key goal of Daw Aung San Suu Kyi’s government as it looks to complete Myanmar’s democratic transition, after almost six decades of isolation under military dictatorship.
The government has been implementing both political and economic reforms since the National League for Democracy took office in 2016. Myanmar has seen an economic slowdown and a decline in foreign direct investment since the country’s image was badly tarnished by its handling of the Rohingya crisis in Rakhine State in 2017 but, despite Western countries having turned away, Asian countries such as China, Japan, and South Korea have expanded their economic presence here.
South Korea is one of Myanmar’s largest Asian economic partners; as of July, it was the sixth largest foreign investor overall, with US$3.97 billion (6 trillion kyats) invested in 177 enterprises, according to the Directorate of Investment and Company Administration (DICA), the government’s investment agency.
Some of Korea’s largest companies have already grabbed significant market share in Myanmar, including Posco Daewoo, Daewoo Motors, Lotte Group and Hyundai.
According to government data, Korean investment lies mostly in manufacturing, infrastructure projects, construction, distribution and hospitality.
Between Oct. 2018 and January of this year, Myanmar’s exports to South Korea—which include cashews, mangoes, rice, beans and pulses—were worth $43.3 million.
Myanmar imports South Korean cosmetics, foodstuff, electronic equipment, textiles and mobile devices, among other commodities.
According to DICA, trade between the two countries in the 2017-18 fiscal year was nearly $798 million. In 2016-17 it was $866 million. In 2015-16 it was $657 million. In 2014-15 it was $862 million. In 2013-14 it was $1.57 billion. In 2012-13 it was $623 million. In 2011-12 it was $667 million.
In February, before Myanmar kicked off a Rakhine investment forum, South Korean Ambassador to Myanmar Lee Sang-hwa offered his government’s support, saying South Korea believes economic development is key to solving the conflict there.
Discussions between Lee and Daw Aung San Suu Kyi last year focused mainly on how South Korea could contribute to the development of Rakhine State’s economy, with the State Counsellor mentioning two major sectors in particular need of investment—agriculture and garments.
Significant Bilateral Ties
Bilateral relations between Myanmar and South Korea have shown significant improvement over last year. In October the two signed the Agreement on the Promotion and Protection of Investments.
In April 2018 a delegation led by Myanmar Minister of Commerce Dr. Than Myint and South Korean Minister of Trade, Industry and Energy Kim Hyun-chong held ministerial talks on enhanced cooperation in trade and investment in Naypyidaw.
Both sides worked on establishing an industrial zone for Korean companies investing in Myanmar, establishing the Korea Desk, and increasing cooperation between the Trade Promotion Department of Myanmar’s Ministry of Commerce and the Korea Trade and Investment Promotion Agency.
During the meeting, the two decided to dispatch Myanmar government employees to South Korea for training in the trade-related information sector, in technical support for setting up a database to implement e-commerce and in implementing trade and investment promotion and protection agreements already signed.
The Myanmar-Korean Chamber of Commerce and Industry (MKCCI) was launched in December to support investment and businesses from both countries.
South Korea’s HUBS MK Co Ltd signed an MOU to develop a nearly-$100-million logistics facility owned by the Ministry of Commerce at Shwe Lin Ban Industrial Zone in Yangon’s far western Hlaingtharyar Township.
The quality of agricultural, livestock and fishery exports could be controlled and sustained by building a modern trade support system that facilitates logistics and the transport of goods from rural areas to a central hub for shipping overseas, according to a government newspaper.
The Yangon regional government and South Korea-based Myanmar Wooree Company also signed a MOU for an industrial development project in an undeveloped township on the west bank of the Yangon River.
In May of this year the Industrial Bank of Korea and the Financial Services Commission sponsored a Myanmar investment seminar for Korean small- and medium-sized enterprises (SMEs) at the Korean Fintech Week 2019 in Seoul. The forum was designed to serve as a platform for promoting Myanmar as an investment destination and to provide information on investment opportunities here, particularly for SMEs.
The Myanmar delegation was led by U Thaung Tun, Union minister for investment and foreign economic relations and chairman of the Myanmar Investment Commission, who told over 280 Korean investors about opportunities in Myanmar.
Last week, Myanmar’s Urban and Housing Development Department signed a joint venture agreement with Korea Land and Housing Corporation to establish a joint industrial complex in Hlegu, north of Yangon.
Comprising industrial and commercial areas, a research-and-development facility and a training school, the Korea-Myanmar Industrial Complex (KMIC) will be implemented by the two agencies in Nyaung Hna Pin village at a cost of $110 million (166.2 billion kyats). According to the Yangon Project Bank, it will be built on 558 acres and will focus on producing export goods.
Around 200 Korean companies are expected to invest in the production facilities, which will generate a projected $10 million in taxes annually.
Apart from investment and trade, South Korea is building a bridge—called the Myanmar and South Korea Friendship Bridge—to link Myanmar’s business hub of downtown Yangon to an opposite bank of the Yangon River. Myanmar State Counsellor Daw Aung San Suu Kyi flew back to Yangon for the ground-breaking ceremony in December.
Additionally, the Korea International Cooperation Agency (KOICA) has provided a grant for sustainable rural development and capacity building in public service, technology, education and fundamental infrastructure building.
In May 2018, a teacher training institute was set up in Yangon at an estimated cost of $12 million. KOICA also provided $20 million in financial assistance to the Myanmar Development Institute, a think-tank focused on socioeconomic development.
In an opinion piece published in The Irrawaddy last week, Lee said “I am quite sure that the state visit of President Moon will become a milestone in the development of bilateral relations between the two countries.”
“I am also confident that the visit will offer great momentum to forge a win-win partnership toward co-prosperity in terms of the three pillars of the New Southern Policy,” he wrote.
Moon is the second South Korean president to visit Myanmar since an assassination attempt on President Chun Doo-hwan during his visit in 1983. President Lee Myung-bak visited in 2012.
Next year marks the 45th anniversary of Korea-Myanmar diplomatic relations. In November, the ASEAN-ROK Commemorative Summit and the Mekong-ROK Summit will further strengthen relations. Daw Aung San Suu Kyi is expected to join.
On Wednesday, Moon will visit the Martyrs’ Mausoleum, which is dedicated to the State Counselor’s late father, independence hero General Aung San, and other leaders of the pre-independence interim government, all of whom were assassinated on July 19, 1947. Then Moon will pay his respects at the Korea Memorial Monument, where 17 of the Korean delegation died in the 1983 Martyrs’ Mausoleum bombing in Yangon.