Korea has successfully transformed itself from being an aid recipient to an emerging donor through rapid economic development. About 130 countries receive official development assistance from the Korean government each year. Koreas development assistance has been steadily growing, recording $699 million in 2007, which jumped from $212.1 million in 2000. The major share of bilateral assistance was channeled to the Asian region (60.8 percent), including Southeast Asia, followed by Africa (14.2 percent) and Latin America (11.1 percent).


Trends of Koreas ODA in Southeast Asia


A large share of Koreas official development assistance has been directed toward Association of Southeast Asian Nations members to strengthen development cooperation as a top priority. From 1997-2007, ASEAN was the largest destination of Koreas ODA in cumulative terms and $719 million was disbursed to the region. In 2007, 25.8 percent of bilateral official development assistance was disbursed to Southeast Asia. This high level of concentration is partly due to the geographical and cultural proximity between Korea and the countries in the region. In particular, Korea has maintained close economic and diplomatic relationships with ASEAN, as Koreas trade and investment partners. So, there is undoubtedly potential for further cooperation between Korea and ASEAN.

Development issues in Southeast Asia spread over various fields including poverty, health, the environment, digital divide, energy and regional integration. The region comprising the ASEAN area is characterized by wide development gaps. In this regard, Korea is focusing on promoting development cooperation between the relatively well-off ASEAN members and the CLMV countries (Cambodia, Laos, Myanmar, and Vietnam) to address the wide development gap within the region. Vietnam, Indonesia, the Philippines and Cambodia were selected as mid-term strategic partner countries through close analysis of aid recipients needs and the optimal assistance methods based on Koreas comparative advantages.

As shown in Table 2, ASEAN members took a 35.9 percent share of the soft loans in cumulative terms, amounting to $1.2 billion. From the total budget, 9.8 percent was allocated for Vietnam as the top recipient of the Economic Development Cooperation Fund with 17 projects amounting to $450.8 million.


Koreas increasing role for poverty reduction in Southeast Asia


Korea is a prime example of a country that successfully overcame poverty in a relatively short period of time through development assistance. Koreas ODA experience is unprecedented. Korea is thus ready to share its own experience with developing countries in Southeast Asia. Internationally, Koreas history of good governance is credited with its successful development. The great lack of such good government is the most critical impediment for the development of Southeast Asian countries.

Despite the possible risk when applying ones own development policy to other developing countries facing different conditions, Korean experience could be a valuable reference for developing countries in Southeast Asia in some areas.

Since developing countries in Southeast Asia usually lack the funds to support their domestic development, promoting trade and attracting foreign investment is something all developing nations must do.

Korean ODA could help them do this by establishing an environment that encourages trade and foreign investment in Southeast Asian countries. Korea could assist these developing nations in areas such as economic policy, institution building, education and training.

Korea has already played an important role in capacity building and human resource development, or HRD. As part of such efforts, Korea has conducted a variety of projects such as building training institutions, as well as providing education equipment and technical cooperation.

Korea, as an IT-industry leader, has recently been participating in regional efforts to narrow the digital divides in Southeast Asian countries by building IT centers, transferring IT technology, and consulting on related policies.

The technical cooperation focused on transferring knowledge is the most effective assistance an emerging donor with relatively limited resources can provide. The technical assistance in the establishment of the stock exchange market in Vietnam is a good example for capacity building as well as knowledge transfer. The Korean government launched a project to assist in the establishment of the stock exchange market in Vietnam and provided financial support worth $1.6 million in three installments between 1996 and 2002. The project supported the Vietnamese governments efforts to adopt a market economy and industrial growth, and contributed to the improvement in economic ties between the two nations.

HRD has also been regarded as one of Koreas comparative advantages. Support for developing countries in the area of HRD was provided through inviting trainees, dispatching experts, and building vocational training centers. In addition, healthcare and education services were provided to fulfill basic human needs and offer a social safety net. Particularly, education is crucial to the long-term development of poor countries in Southeast Asia. Education allows them to stretch their potential and tackle such issues as reducing poverty, increasing industrial development, regional development and organizational efficiency of public offices. In this regard, Korea has been providing various technical cooperation projects such as building educational institutions, providing equipment, plus developing teaching materials and curriculum as well as training teachers.


Challenge and opportunities


Koreas aid operation lags far behind those of other Development Assistance Committee member countries with little domestic support from the public. Under these circumstances, Korea faces the formidable task of meeting the high standards set by other major donor countries in terms of both quantity and quality.

The Korean government is taking steps to join DAC by 2010. Joining DAC will improve its ODA management and help promote the greater harmonization of aid policies with other advanced countries.

The Korean government is currently reviewing its ODA policies and practices. The review will enhance its effectiveness and help it cope with the challenges Korea will face as its ODA increases significantly in the coming years. The first step is to substantially reform the ODA management system to improve aid effectiveness in Southeast Asia. Also, Koreas ODA policy will focus on strengthening CLMVs capacity in designing and managing poverty reduction strategies under an aid coordination mechanism.

Recent initiatives of the Korean government to implement the development assistance with a strong regional focus give us some future perspectives. After the 1997 financial crisis, Korea actively participated in the ASEAN+3 Economic Ministers Meetings, proposing three on-going cooperation projects such as the Conformity Assessment Development Program in Industrial Standards, the ASEAN+3 SMEs Network and the East Asia Special Cooperation Initiative. Korea has also helped with the projects proposed by other countries. Koreas constructive role in "Strengthening the Competitiveness of ASEAN SMEs" proposed by Malaysia and Myanmar is the example. Recognizing the establishment of a DB center is essential for creating business opportunities and enhancing bilateral trade and investment relations, the Korean government has made a continuous effort to establish and elaborate the ASEAN+3 SMEs Network.

In particular, the Joint Declaration on Comprehensive Cooperation Partnership between ASEAN and Korea concluded in Vientiane, Laos in November 2004 proves this bilateral relationship has momentum.

Under the framework of the ASEAN-Korea FTA, the Korean government established the ASEAN-Korea Center to promote trade and investment linkages and facilitate business opportunities between them in last March. The center has been facilitating technical cooperation, including the transfer of technology and support initiatives and programs related to narrowing the development gap in ASEAN.

Korea is now giving back to the community of nations by sharing its experience and knowledge with ASEAN in the context of a regional partnership for sustainable development. Also, Korea has shared its experience in economic development with ASEAN members and made efforts to help apply the lessons to lessen the development gap among Southeast Asian countries.

In this regard, many projects are currently being implemented between Korea and ASEAN, and they can be categorized as follows: grant projects including IAI-related projects, EDCF projects and projects under the framework of the ASEAN+3 Economic Ministers Meeting, and other cooperation projects.

Korea needs to reinforce and explore the cooperative programs targeting regional cooperation with ASEAN, especially at a time when the process of ASEAN integration is being highlighted. Furthermore, reflecting ASEANs needs and interests in the initial stages of designing development projects will serve the mutual interests of Korea and ASEAN, while helping in the pursuit of strategic cooperation.

Between each of the ASEANs six members and CLMV, the disparities in overall and economic developments are huge, and therefore, economic support should be focused on these CLMV nations by launching differentiation strategies for each country. Considering that poverty-reduction is emerging as the biggest issue in international cooperation, it is absolutely necessary to provide development aid through the cross-link of soft loan and grants, and focus on Koreas development experience and development of human resources projects.

ASEAN in the future should emphasize the connecting strategy to the regional integration policy for development cooperation. From a mid- to long-term perspective, it is urgent to establish a strategic application system for ASEAN cooperation projects, and it is necessary to systematically settle/administer various projects brought up by each nation. By securing the trust of ASEAN and promoting our position within ASEAN, it is important to come up with more earnest and proactive cooperation projects and build a project promotion system towards ASEAN, leading the economic cooperation of East Asia.

Various ASEAN cooperation projects tend to be disorganized because of unofficial requests. Hence, an effective promotion system should be emphasized. Southeast Asian foreign affairs and trade policies should be established under a comprehensive cooperation system, which may build trust between nations. It may operated consistently, rather than launching short-term cooperation projects. Founded upon this idea, governments must constantly investigate policy adjustments. The most urgent task within the ASEAN region is narrowing the development gap and supporting the economic integration of the least developed countries (LDCs). Therefore, it is advisable to actively participate in projects of ASEAN IAI as well as ASEAN Development Fund.

In conclusion, taking the Korea-ASEAN Special Summit Conference in this coming June as an opportunity, we should create a comprehensive program called the ASEAN Development Initiatives in order to systematically aid the LDCs of ASEAN. We have to also take advantage of the discussion channels such as the economic ministers meeting and the high-rank economic officials meeting proposed at the ASEAN+1 Summit Conference and formulate specific development cooperation programs. Through this, we should reinforce aid for public organizations within the region, such as the Environmental ODA and the Climate Change Fund; determine the ODA demands of LDCs of ASEAN; and build a development partnership that is credible to the ASEAN community under a mutual and reciprocal cooperation foundation.