Securing Growth: ASEAN-South Korea Economic Resilience – OpEd

Amid escalating geopolitical tensions between major powers and rapid technological disruptions, the economic landscape of the Indo-Pacific region has reached a critical juncture in 2025.

The supply chain shocks caused by the COVID-19 pandemic, alongside rising trade restrictions and semiconductor shortages, have highlighted the vulnerabilities of global networks. In response, South Korea and the Association of Southeast Asian Nations (ASEAN) have initiated a strategic realignment aimed at promoting secure economic growth through diversified, resilient trade supply chains and targeted investments. This essay argues that South Korea and ASEAN can enhance capital stability in an uncertain landscape by leveraging their complementary strengths in manufacturing, digital innovation, and regional connectivity to mitigate external attraction risks sustainably. 

Historically, ASEAN and South Korea formalized their partnership through the ASEAN-Republic of Korea Free Trade Agreement in 2007, which was strengthened by South Korea’s New Southern Policy in 2017. As of 2024, bilateral trade between the two reached USD 196.64 billion, making ASEAN South Korea’s fifth-largest trading partner and highlighting their deep commercial interdependence. This figure represents a 3.3 percent increase from the previous year, indicating a growing diversification beyond traditional markets. In 2023, Korean foreign direct investment in ASEAN reached 11 billion USD, positioning ASEAN as the sixth-largest recipient of Korean FDI and reflecting confidence in the region’s long-term potential.

Strategic imperatives driving this cooperation include the desire to navigate a contested, multipolar environment by reducing dependency on single sources and enhancing strategic autonomy. Both South Korea and ASEAN members have faced negative impacts from concentrated trade exposure, particularly with China and the United States. By expanding intra-regional commerce and technology partnerships, they can create a buffer against external coercion and contribute to a rules-based open market. This cohesive policy vision is supported by active participation in the Regional Economic Comprehensive Partnership, which attracts investment through predictable tariff schedules and harmonized regulatory standards across fifteen economies.

The central agenda focuses on strengthening supply chain resilience in advanced industries, particularly in semiconductors and artificial intelligence hardware. In 2023, ASEAN-Korea trade in goods surpassed USD 187 billion, comprising USD 109 billion in exports and USD 78 billion in imports, with semiconductors accounting for a significant portion of high-value manufacturing trade. South Korea’s leadership in memory chip production and AI-design chips complements ASEAN’s expanding markets and investments in consumer and digital infrastructure. Joint research and development initiatives, skills training programs, and collaborative innovation hubs in Singapore, Malaysia, and Vietnam will facilitate technology transfer and foster region-wide value chains.

Parallel to nearshoring and “friendshoring,” South Korean firms are increasingly adopting strategies to expand production within ASEAN. A notable example is the USD 1.1 billion battery cell plant opened in Indonesia by Hyundai Motor Company and LG Energy Solution in 2024, which has an annual capacity of 10 gigawatt-hours to serve both local and export markets. This investment secures essential inputs for electric vehicle manufacturing and strengthens confidence in ASEAN’s industrial base. Complementary logistics infrastructure is under development through ASEAN’s Master Plan on Connectivity, which aims to streamline customs procedures, upgrade port facilities, and expand digital supply chain platforms. These efforts will reduce lead times and enhance transparency.

Investment flows between ASEAN and South Korea illustrate a significant shift towards green digital sectors. In 2023, foreign direct investment (FDI) inflows into ASEAN reached a record USD 230 billion, fueled by capital aimed at enhancing the region’s energy transition and digital economy. South Korean investors are focusing on electric vehicle assembly, renewable energy projects, fintech services, and urban digitalization initiatives, supported by the Korea-ASEAN Cooperation Fund and concessional loans from the Bank EXIM Korea. These mechanisms mobilize public-private partnerships that support large-scale infrastructure and technology deployments, strengthening the region’s economic security framework.

Despite these gains, challenges remain. Political and regulatory differences among ASEAN member states hinder the establishment of a harmonized supply chain and create legal uncertainty for investors. Additionally, competition from major partners, particularly China and Japan, requires South Korea to continuously adjust its policies to maintain its attractiveness. Furthermore, digital governance and data sovereignty must be carefully managed to balance security concerns with the critical flow of cross-border data and AI development. External shocks—ranging from climate-induced natural disasters to global financial volatility—also necessitate strong crisis management mechanisms.

Complementing these initiatives, financial safety nets have been strengthened. Currency arrangement swaps under the Chiang Mai Initiative Multilateralisation have been enhanced, with pooled resources now totaling USD 240 billion, including South Korea’s committed share of USD 38 billion. During the most recent ASEAN+3 finance meeting in Milan, ministers secured rapid external liquidity support to address financing pressures. This framework has demonstrated its effectiveness during crucial financial periods and periods of market turbulence. Additionally, discussions are ongoing to create an ASEAN-Korea economic fund dedicated to quick disbursement in crises, which will further strengthen regional resilience.

In conclusion, strengthening the partnership between South Korea and ASEAN is a proactive approach to addressing current security and economic challenges. By leveraging South Korea’s advanced manufacturing and digital capabilities alongside ASEAN’s markets and strategic location, the alliance fosters supply-chain resilience, attracts sustainable investment, and enhances regional stability. Moving forward, it will be essential to address regulatory fragmentation, enhance governance of digital frameworks, and deepen public-private collaboration to sustain momentum. As the Indo-Pacific navigates an era of uncertainty, the ASEAN-Korea South nexus serves as a model for cooperative economic security, grounded in shared interests and a focus on future integration.

The opinions expressed in this article are the author’s own.

References

• Pant, H. V., & Saha, P. (2024). India, South Korea, and the ASEAN: Middle Power Diplomacy in the Indo-Pacific. Routledge.
• Er, L. P. (Ed.). (2024). Security in the Asia-Pacific Region: Cooperation and Challenges (1st ed.). Routledge.
• ASEAN Secretariat. (2024). Framework on ASEAN Supply Chain Efficiency and Resilience. ASEAN Secretariat.