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World Economy Brief

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Title The Growth of the ASEAN Infrastructure Market and Its Implications for Policy Makers in Korea
Author Sungil Kwak and Mi Lim Kim
Date 2019-07-10
File WEB 19-13.pdf 

As of October 2018, Korean construction firms have received a total of 98.9 billion U.S. dollars in orders (or 40.9 percent of all orders) within the New Southern region, which includes ASEAN Member States (AMSs). The figure exceeds the 85.7 billion U.S. dollars in orders to the Middle East (35.5 percent of the total), indicating that the New Southern region has become Korea's largest origin of orders. We provide comprehensive information on the ASEAN infrastructure market to policy makers in Korea. In addition, we survey Korean construction firms to evaluate their business environment and performance. Furthermore, we search for lessons to be gained by analyzing the support measures of Japan for its firms in ASEAN infrastructure markets.
 Based on the results of the previous analysis, we suggest policy implications for policy makers in Korea to provide support for its construction firms actively engaged in the ASEAN infrastructure market. First, given that construction firms from Korea have difficulties in hiring local technical personnel, policy makers could consider expanding the Technology Advice and Solutions from Korea (TASK) program from the manufacturing sector to the construction sector as well to supply adequately trained workers. Second, a support system for Korean construction firms to facilitate their localization is required. Third, the policy makers in Korea could devise and provide customized support for SMEs. Fourth, we need to increase the size of policy funds related to overseas infrastructure markets. Fifth, a system should be established to identify flagship projects for the New Southern Policy. Sixth, policy makers in Korea may help ASEAN to set up technical standards in the infrastructure sector.