South Korea's Moon unveils new focus on Southeast Asia

BOGOR, Indonesia (Reuters) - South Korean President Moon Jae-in on Thursday unveiled a new policy aimed at deepening ties with Southeast Asia, as the North Asian economic powerhouse seeks to curb its reliance on traditional trading partners like China and the United States.

South Korean President Moon Jae-in is greeted by his Indonesian counterpart Joko Widodo during their meeting at the presidential palace in Bogor, West Java, Indonesia, November 9, 2017. REUTERS/Dita Alangkara/Pool

Moon made Indonesia, Southeast Asia’s biggest economy, his first state visit to the region and was accompanied by a delegation of around 200 business leaders.

The “New Southern Policy” aims to better connect South Korea to the Association of Southeast Asian Nations (ASEAN) grouping and expand the economic influence of Asia’s fourth-largest economy in the region home to more than half a billion people.

“Korean diplomacy in Asia has been more toward Japan, China and Russia. But I see that it should expand to new horizons,” Moon told a business forum in Jakarta, where he pledged to “dramatically strengthen cooperation with ASEAN”.

South Korea’s presidential Blue House has said the policy will mirror Moon’s “New Northern Policy” aimed at expanding cooperation with China, Japan, Russia, and Mongolia.

Indonesia and South Korea signed on Thursday a memorandum of understanding on a light rail transit (LRT) system in Jakarta, part of a series of pacts reported to be worth up to $1.9 billion.

A recent year-long diplomatic standoff between Seoul and Beijing over the deployment of a U.S. anti-missile system has exposed the dependence of Korean companies on Chinese customers and likely exacerbated Seoul’s urgency to diversify ties.

During a joint news conference with U.S. President Donald Trump this week, Moon said he was aiming for a more “balanced diplomacy,” which would include Russia, ASEAN countries, and members of the European Union.

Moon held talks with Indonesian President Joko Widodo at a state palace in Bogor, south of Jakarta, and discussed infrastructure, trade, and also tension on the Korean peninsula.

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“I appreciate President Moon’s position that he remains open to resolving any disputes through dialogue,” Widodo told a news conference in the Dutch colonial-style palace.

Indonesia has traditionally had good relations with North Korea and maintains diplomatic ties and is one of a small number of countries with an embassy in Pyongyang.

A number of South Korean companies already have or are planning big investments in Indonesia. Steel giant POSCO has a multi-billion-dollar joint venture with Indonesia’s Krakatau Steel, Hyundai Motor is setting up a car factory, and Samsung Electronics Co assembles smartphones in the country.

Indonesia is also emerging as an important market for South Korean defense equipment and the countries are cooperating on a venture to jointly build a fighter plane, dubbed KF-X.

Moon said South Korea aimed to boost trade with Indonesia to $30 billion by 2022 and eventually to more than $50 billion.

Trade between the countries was worth about $10 billion in the first nine months of 2017, up nearly a fifth from the corresponding 2016 period. Korean foreign direct investment rose about a quarter to $1.37 billion.

Both leaders said the relationship between the countries had been redefined as a “Special Strategic Partnership”.

South Koreans make up one of Indonesia’s largest expatriate groups, with numerous Korean restaurants and bars in parts of Jakarta.

Besides corporate muscle, Korea’s soft power has also grown in Indonesia alongside other countries in Southeast Asia.

Korean K-Pop is hugely popular among Indonesians, with long-established fan clubs and bands, like BTS, touring the Southeast Asian country. Indonesian Twitter accounts dedicated to Korean pop idols have around a million followers.

Additional reporting by Bernadette Christina Munthe, Kanupriya Kapoor, Cindy Silviana and Nilufar Rizki in Jakarta and Christine Kim and Hyonhee Shin in SEOUL; Writing by Ed Davies; Editing by Michael Perry