In recent years, the U.S.-China hegemony competition has intensified, dividing the world into two blocs. ASEAN has long cultivated its position on the international stage by maintaining a certain distance between the United States and China. In that sense, ASEAN is the best partner for Korea to effectively respond to the divided world. Therefore, this study seeks the directions of cooperation with ASEAN in supply chain, digital trade, climate change response, and health and development cooperation in line with changes in the international order.
Chapter 2 analyzed the supply chain restructuring in the ASEAN region. Recently, the global value chain (GVC) has been rapidly changing due to the intensifying U.S.-China trade war and expansion of technology competition led by the United States. In addition, economic security issues have been raised as one of the driving factors to the recent changes in GVC. Such changes are expected to lead the following developments in ASEAN. First, expansion of the regional value chain (RVC) in East Asia will be led by ASEAN and China, and the structure of ASEAN’s supply chain will undergo modification in accordance with the GSC strategies of the United States. Also, FDI toward ASEAN will increase as more multinational companies depart from China and Chinese companies expand investment in the region. ASEAN will continue efforts to digitalize its customs clearance process while also promoting digital trade. Lastly, each ASEAN member state’s supply chain will be transformed in line with the strategic industries and core items such as high-tech products (semiconductors and batteries), minerals, medical and health products, and crops.
Chapter 3 analyzed the digital economy and digital trade in the ASEAN region. Due to the spread of COVID-19 and the development of information and communication technology, the digital economy has rapidly expanded around the world. Even before the outbreak of COVID-19, ASEAN had promoted digital transformation and integration, and the outbreak of COVID-19 has further increased its importance in terms of economic recovery and creation of growth engines. Digital transformation and digital trade are areas where Korea and ASEAN are in high demand for cooperation. ASEAN’s digital transformation conditions and digital competitiveness vary greatly by country. Singapore has world-class digital competitiveness and infrastructure, while Indonesia and the Philippines, which have relatively low income levels, and Myanmar, Cambodia, and Laos, which are relatively new members of ASEAN, have low digital competitiveness and poor related infrastructure. As digital trade expands, concerns about digital trade barriers are also growing. In the case of major ASEAN countries, digital trade barriers are high in most countries except Singapore and the Philippines.
ASEAN is actively promoting digital transformation policies and strengthening digital trade cooperation with countries within and outside the region. ASEAN has promoted digital transformation policies since the 2000s. With the COVID-19 outbreak accelerating digital transformation, ASEAN has unveiled policies such as the ASEAN Comprehensive Recovery Framework (ACRF), ASEAN Digital Master Plan 2025 (ADM 2025), and Bandar Seri Begawan Roadmap (BSBR). ASEAN’s digital policy focuses on facilitating digital trade, strengthening digital capabilities, establishing a digital payment system, and expanding digital infrastructure. ASEAN aims to initiate negotiations on the ASEAN Digital Economy Framework Agreement (DEFA) by 2025. ASEAN is promoting cooperation on digital trade rules through FTAs with countries within and outside the region, such as the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Chapter 4 analyzes the response to climate change in the ASEAN region. As the climate change and carbon neutrality issues are emerging as global agendas, ASEAN has established and implemented a series of adaptation and mitigation policies to achieve its carbon neutrality target, but still remains in great need for cooperation. Among ASEAN member countries, Indonesia ranked in the top 10 emission countries in the world, and accounted for the largest share of overall emissions in the region. The international community has been implementing a series of climate-change cooperation schemes, such as the Kyoto Protocol in 1977 or the Paris Agreement in 2015. ASEAN, as a regional community, also has been implementing its own internal and external cooperation schemes, while individual ASEAN Member States (AMS) have built their own national-level initiatives to achieve NDC targets. According to an analysis of Creditor Reporting System (CRS) data provided by the OECD, Indonesia is the biggest ODA recipient among AMS in climate change-related sectors. By sectors, water-resource/sanitation and environment protection took the major share of entire ODA. The Korea-ASEAN Dialogue on Environment and Climate Change (2021) has been the major cooperation channel for Korea-ASEAN climate change cooperation, producing a series of initiatives in the areas of air pollution, carbon dialogue, carbon neutrality and the establishment of a green transition center, etc. Vietnam and Indonesia are the biggest recipients of ODA from Korea to ASEAN, with water resource/sanitation and environment protection accounting for the major share of this ODA. When considering the emission levels of AMS, multilateral cooperation schemes, and Korea-ASEAN cooperation, the biggest emitter (Indonesia) and ODA recipient (Vietnam) are projected to have the highest demand for bilateral climate change cooperation. Previous ODA projects show a concentration in the areas of water resource/sanitation and environment protection, which have taken the major share of Korea’s ODA to ASEAN. The demand for cooperation in renewable energy sources is expected to increase in line with efforts to mitigate the high level of emissions produced in the power and transport sectors.
Chapter 5 shows that Korea’s cooperation with ASEAN in the health sector focuses on vaccinations, nutrition improvements, and infrastructure construction. Recently, the need for collaboration in universal health coverage has been raised. Korea’s ODA for digital transformation possesses a comparative advantage against other major ODA donors, which can be leveraged in ODA projects such as health promotion, education, and rural development. The importance of green ODA is increasing due to countries’ implementing greenhouse gas reduction policies. The Korean government is also making efforts in policy-making to link green ODA with overseas greenhouse gas reduction projects.
Based on the above, the direction of ASEAN cooperation by sector is proposed as follows. Above all, for supply chain cooperation with the ASEAN region, Korea should predict changes in the supply chain and set an effective direction of response. First, Korea should utilize ASEAN, which has become a global manufacturing hub, as Korea’s main production site for key sectors and strategic items to diversify its supply chain structure. Second, Korea should actively support the establishment of ASEAN’s supply chain and pursue diversification of its supply chain with ASEAN key partner countries. Third, Korea should assist in digitizing ASEAN’s supply chain as well as ASEAN’s DX (Digital Transformation) by leveraging its advanced digital technology. Fourth, Korea should take advantage of ASEAN’s efforts to transform its supply chain (e.g. strengthening manufacturing capabilities, upgrading industrial structures, training human resources, etc.) as a favorable opportunity for Korea’s economic cooperation with ASEAN.
Digital transformation and digital trade are fields of great interest to both Korea and ASEAN, and cooperation has been actively pursued. The digital sector is also a key area of cooperation in Korea’s new cooperation policy toward ASEAN, the Korea-ASEAN Solidarity Initiative (KASI), which was unveiled during the 23rd ASEAN-Korea Summit in November 2022. Based on our analysis, this paper suggests the following four areas for Korea-ASEAN digital cooperation. First, Korea-ASEAN cooperation should contribute to narrowing the digital infrastructure gap by country. This is because the digital infrastructure gap eventually creates a national income gap in the ASEAN region as the digital economy continues to grow. Second, cooperation between the two regions should be strengthened through Korea’s experience in designing and implementing e-government systems. This is an area where Korea has accumulated more experience compared to advanced Western countries. Third, cooperation is necessary to strengthen digital capabilities and foster talent in the ASEAN region. Even when a sufficient infrastructure has been established, it is useless if there is no one to manage it. Finally, it is necessary to support the strengthening of capabilities to establish digital trade norms in the ASEAN region.
ASEAN is also showing high interest in responding to climate change. For future climate change cooperation between Korea-ASEAN, both sides should establish cooperation agendas based on the demand within ASEAN and current national levels, as follows. First, the present bilateral cooperation channels established only with Vietnam and Indonesia should be extended to other AMS. Second, cooperative efforts will be necessary to drive the energy transition in power generation (from coal to RNE) to respond to the high demand of AMS. Third, there must be a linkage system between multilateral and bilateral cooperation channels to exchange and utilize each agenda. Fourth, considering the industrial structure of ASEAN and Korea, which are heavily reliant on the manufacturing sector, Korea should include carbon capture and storage (CCS) projects within its scope of cooperation with AMS in the climate change agenda.
Finally, this study presents the following four directions for health and development cooperation between Korea and the ASEAN region. First, Korea should share its past development experiences to support ASEAN countries’ policy-making. Korea’s experience in implementing a national health insurance system can help improve universal health coverage systems in ASEAN countries. Second, the Korean government should carefully assess recipient countries’ potential for digital transformation ODA, as this is linked with many other subfields. Third, developing win-win strategies between Korea and recipient countries through ODA projects is necessary. Specifically, green ODA can help Korean firms gain contracts for infrastructure development in ASEAN countries. Fourth, large-scale ODA packages allow Korea and other recipient countries to develop and implement projects that both partners can recognize as important.