Song, Young Gil, Member of National Assembly, Republic of Korea, says that the unprecedented chemistry between President Moon and Prime Minister Modi, will bring fruitful outcomes to Korea and India.
Seoul: Song, Young Gil is currently the Member of the National Assembly, Republic of Korea, representing the Democratic Party. As the Mayor of the Incheon Metropolitan City, Song was responsible for the development of the Incheon Free Economic Zone (IFEZ), a designated area, three times bigger than Manhattan, and is today a hub of activity for world-class businesses, higher education institutions, and several international organisations of repute. Presently the Chairman of the Korea-India Parliamentary Friendship Group, Song spoke to Uma Keni Prabhu in Seoul on what the two Republics should do to enhance cooperation on the Fourth Industrial Revolution, trade and investment, and promotion of peace in the Korean Peninsula and surrounding region. Excerpts:
Q: Both India and the Republic of Korea (ROK) are looking to expand their strategic partnership to accelerate political cooperation, economic engagement and cultural understanding. What more needs to be done to strengthen this partnership?
A: Korea and India have never had any disputes over history nor territory. The Korea-China relationship however, has some friction due to our alliance with the US. Furthermore, India’s economy and population is as significant as China, but India is the world’s biggest successful democracy, and ensures transparency of its government. Since the start of the Moon administration in May 2017, Seoul is enhancing its diplomatic relationship with New Delhi under the New Southern Policy (NSP), as well as that with the major four nations—US, China, Japan and Russia—surrounding the Korean Peninsula. NSP is one of the core foreign policies of the Moon administration. These efforts were reflected when no sooner had he taken over the reins than President Moon, Jae-in, for the first time in history, sent a special envoy (the former minister of the Ministry of Culture, Sports and Tourism H.E. Chung, Dong-Chae) to India. India’s Act East policy and Korea’s NSP detail our shared vision. Based on this, the two countries should enhance cooperation in the areas of human and cultural exchanges, trade and investment, the Fourth Industrial Revolution, and promotion of peace in the Korean Peninsula and surrounding region. The unprecedented chemistry between President Moon and Prime Minister Modi, two highly respected leaders, will bring fruitful outcomes to Korea and India. Also, as chairman of the Korea-India Parliamentary Friendship Group, I will endlessly work to bring Korea and India closer than ever.
Q: What is the rationale behind the NSP?
A: NSP’s aim is to enhance the diplomatic relationship with the target countries up to the same level as the relationship with the four major countries, by widening the cooperation on political, economic, social, and cultural aspects. There are 1.3 billion people living in India, and 640 million people in the ASEAN countries, meaning that the population of NSP’s target region totals two billion people. The average age in these regions is 30, which is younger than in any other region in the world, and these regions are thus more likely to develop faster. In terms of GDP, the region is a new growth hub with $2.9 trillion in ASEAN and $2.7 trillion in India. The NSP target countries are important trading partners. The exchange in people records over 10 million and trade total exceeds $160 billion. ASEAN is Korea’s second-largest trading partner with $159.7 billion in 2018, and the trade total with India is $21.5 billion, making it the 11th largest trading partner.
Q: India is of great geopolitical significance for South Korea, especially as it can serve as a bridge between Korean businesses and the Middle East and African markets. How does Republic of Korea plan to strengthen the foundation of its businesses in India?
A: “Strategic Partnership” between Korea and India was initiated in 2010 and was upgraded to a “Special Strategic Partnership” in 2015, which provided momentum for a leap forward. Korea has paid attention to India’s rapidly emerging potential as a partner for overseas markets and diplomatic diversification, and Indian Prime Minister Modi is also emphasising cooperation with Korea as a model case for its short-term economic development. In particular, India is a strategic hub that extends from the Indian Ocean to the Middle East and Africa. It has the world’s third-largest domestic market and the largest number of immigrants in the world. It also proactively pushes for policies to boost the nation’s manufacturing capabilities, so it could serve as a bridgehead for the Middle East and Africa. In response, Korea’s investment in India is estimated to be around $300-400 million per year, but it has surged to $900 million in 2017, the highest since 2011. Currently, there are more than 700 Korean companies operating in India. At the governmental level, we will make more efforts to deepen our bilateral exchanges and cooperation.
Q: What reforms do you think the Modi government should undertake to attract foreign investors, especially Korean?
A: The Korea-India Comprehensive Economic Partnership Agreement (CEPA), which went into effect on 1 January 2010, contributed significantly to Korea’s export expansion to India. According to an analysis of export performance based on India’s import statistics, the export of items that have benefited from the CEPA has increased 8.6% annually over the past six years. These products lead the overall increase in exports to India. Korea’s share of the Indian market in 2016 reached an all-time high at 3.45%. Recently, however, the positive effect of preferential tax rates for Korea has been gradually reduced due to intensifying export competition in the Indian market and poor use of CEPA. In particular, it has been found that Korean companies have a lot of difficulties expanding exports amid intensifying export competition in India due to the visible effect of tariff reduction from the Japan-India CEPA, which came into effect in August 2011, and also the increased inflow of low-priced products from China. Our companies are having difficulties in using CEPA in terms of issuing certificates of origin, strict application of customs duties, and ineffective reduction of tariffs. An additional opening of the Indian market is necessary, focusing on items with increasing demand for imports from India. In addition, strict standards for determination of origin, which have been cited as major difficulties in utilising CEPA, should be eased, as the determination of origins is currently more advantageous for Japanese companies due to the Japan-India CEPA. Korea should also be included in the improvement of talks about the service sector, which Japan has secured, but Korea has not yet.
Q: Considering India’s competence in space science and technology, does South Korea have any plans of collaborating with India in these fields?
A: Collaboration in space science and technology between the two countries requires smaller-level cooperation to get familiarised with each country’s industry and business standards. Aerospace is a suitable area to start with and widen the cooperation further. Korea Aerospace Industries (KAI) is one of the biggest aerospace manufacturers in Korea. KAI proved its capability to build reliable and durable aircraft from fixed and rotary wings for the space programme. The company is collaborating with the Korean military to build light attack helicopters (LAH) and next-generation fighter jets. The project for the next-generation fighter jets is also in collaboration with Indonesia. KAI gained trust regarding its aircraft by proving the operability to its Indonesian partners, and initial exports have led to increased trust concerning the development of the next-generation fighter jets. KAI is actively seeking to export its KT-1 trainer airplane to India. I hope this initial export will lead to more cooperation. Defexpo India 2020 would be an ideal event to begin the cooperation between the two countries.
Q: The Indian government plans to create a fund for infrastructure modernisation. Are the Koreans participating in this? If yes, which sectors are you targeting?
A: There is a lot of interest in infrastructure modernisation projects in India. For example, Korea Electric Power Corporation (KEPCO) signed a MOC for technical cooperation on new energy business with Power Grid Corporation of India Limited (PGCIL) in July 2018. KEPCO and PGCIL have agreed to jointly enter India’s new energy businesses such as energy storage (ESS), smart grid (SG), and EV (electric vehicle) charging. KEPCO plans to implement a project to reduce power grid loss in India, which is over 25%, by utilising KEPCO’s advanced telemetry technology. In addition, many Korean companies are interested in large-scale infrastructure projects in India, including the Delhi-Mumbai industrial corridor project, the cargo-only railway corridor project, the Sagarmala project, the state-run thermal power plant project, and the railway modernisation project. Regarding the fund, the Korean government is planning to utilise the $10 billion financial package for India’s infrastructure that was introduced in 2015. It will then engage with India’s National Infrastructure Investment Fund to cooperate further.
Q: India’s ingenuity in software development is well appreciated the world over. Does Republic of Korea have any plans of co-creating with India globally competitive products?
A: The Korean government, as well as the National Assembly, is putting greater efforts into facilitating Korea-India economic relations than ever. Due to NSP, India, a key partner, is now getting significant attention from Korean businesses and over 500 Korean companies, including Hyundai, LG, and Samsung, are expanding their presence in India. I believe that we will see many tangible outcomes very soon. Also, part 8 of CEPA between the ROK and India covers “the movement of natural persons”. For the first time in the history of Korea’s free trade agreements with other countries, Seoul has agreed to open its market for computer hardware engineers, network engineers, webmasters, and English teachers for primary and secondary education from India. This clause has not been included in FTAs with the US and the EU. Part 8 aims to facilitate and utilise advanced manpower in IT. Out of 163 criteria from the agreement, approximately 90 areas are related to IT. However, the utilisation of this clause is not as high as we expected. Creating a platform that provides a job matching service for Indian IT workers with enhanced support for living costs in Korea, could help promote part 8 of CEPA. However, the first and foremost thing is an amendment of CEPA, to better facilitate the movement of high-level workers. Also, Korea and India have agreed to initiate the follow-up negotiation regarding the implementation of CEPA. However, the Mutual Recognition Agreement (MRA) on electronic and communication equipment and gadgets are still far from its authorization.
Q: Tell us more about the Incheon Free Economic Zone (IFEZ)? Would South Korea like to co-create something similar with India, in India?
A: The Incheon Free Economic Zone (IFEZ) is a designated area, three times bigger than Manhattan that covers the western part of Incheon metropolitan city. Currently, world-class businesses, higher education institutions, and international organisations are situated in IFEZ. They create the core value of the IFEZ, as they generate economic profit, financial revenue, and regional employability. The IFEZ Authority is its governing body and oversees development of the free zone. It also actively seeks to bring investment opportunities to the IFEZ. I believe Korea would be very enthusiastic about creating a joint international economic free zone with India. However, as shown from our own IFEZ’s example, the commitment from major Indian companies is necessary to attract capital from Korean private sector. I have been reiterating the importance of securing investments from major Korean businesses in IFEZ, as it helps attract foreign investments. When international companies are looking for investment opportunities, they always ask about the involvement of the destination country’s major businesses. Without it, an investment opportunity seems riskier. Major Korean businesses such as Samsung Biologics have invested in IFEZ. Currently, there are 87 international firms such as Boeing, GE healthcare, and DHL, that have invested in IFEZ..
Q: Will Seoul ever become part of the Indo-Pacific geopolitical construct? What role should India play in this?
A: The Republic of Korea has made its stance about the United States’ Indo-Pacific Strategy clear. Our NSP shows a willingness to harmoniously cooperate with the Indo-Pacific Strategy under the conditions of openness, comprehensiveness, and transparency, which are the fundamentals of cooperation in this region. On 2 November, the Korean ministry of foreign affairs and the US state department announced the joint fact sheet on their Regional Cooperation Efforts. This joint fact sheet clearly shows the aspects of harmonized cooperation between the NSP and the Indo-Pacific Strategy. Regarding the Indo-Pacific geopolitical construct, India implements an outstanding foreign policy model that Korea should follow. India maintains a cooperative policy with other nations while keeping a strategic balance, which helps to keep world peace. India is cooperating with China and Russia. Also, India maintains a trilateral cooperative relationship with the US and Japan. Therefore, I am looking forward to seeing India’s wise decision regarding this matter.
Q: What was the fallout of South Korea’s decision of letting the US deploy its missile system, Terminal High Altitude Area Defense (THAAD) in its territory?
A: Upon its delivery to the Korean peninsula, THAAD was promoted as a defense system for the region. However, THAAD does not address a potential North Korean missile attack on Seoul. THAAD, as its name suggests, aims to prevent the missile from terminal high altitude, whereas the North Korean missile travels at a lower altitude. Therefore, THAAD is mainly a defense system for the US mainland. After the deployment, China engaged a so-called “anti-Korea” campaign, which is not officially ended yet. It is very difficult to evaluate the fallout from the THAAD deployment. However, in 2017, the Korea Development Bank estimated that the Korean economy suffered a loss of almost $20 billion since the deployment. Also, a ban on Chinese group tours to Korea is still effective. According to China’s defense white paper, the US THAAD deployment in Korea hinders the strategic balance in the region and undermines the security interests of the countries in the region. The US, on the other hand, gained a strategic high ground in the region and the American military-industrial complex benefitted from the deployment of THAAD through soared stock prices, whilst Korea is paying for its costs.
Q: Does Korea think that India’s membership to Nuclear Suppliers’ Group (NSG) would further strengthen the regime?
A: India’s inclusion into the NSG will boost the global export control system. India already achieved its capability to successfully operate nuclear power plants and waste management. With India’s membership to the NSG, the regime and global security from nuclear threats will be stronger. The Korean peninsula is facing a nuclear issue; therefore the Korean government is actively engaging with other members of the NSG to strengthen the regime by allowing new member states to join the group.