The Philippines was the first country in the Asean region to establish official ties with South Korea. Today the economic aspects of this relationship have intensified at various levels.
South Korea is now a highly developed economy and currently experiencing robust expansion, with real gross domestic product (GDP) growth rate forecasted to reach around 4 percent this year, according to the World Bank and European Commission.
Meanwhile, the Philippine economy is also on the upswing, averaging around 6 percent in the last five years. Many studies have focused on the economic relations between the Philippines and the United States, Japan, China and Asean, but very few on the Philippines vis-à-vis South Korea.
South Korea is now the fourth-largest trading partner of the Philippines after Japan, the US and China.
Its exports to the latter have almost doubled, from $4.57 billion in 2009 to $8.78 billion in 2013. The Philippines’s exports to South Korea increased by 40 percent from, $2.65 billion in 2009 to $ 3.71 billion in 2013.
The Philippines is the 13th top importer of products from the Republic of Korea in 2014, with products valued at $10 billion, contributing 1.80 percent of Korea’s total imports.
Our major imports from Korea include mineral fuels, lubricants and related materials, valued at $894.51 million (36.5-percent share), and electronic products, worth $459.55 million (18.8-percent share).
Trade between the two countries will further expand in the next few years, given that Asean, where the Philippines is a founding member, has been continually refining its free-trade agreement with Korea. Asean’s overall trade with Korea is expected to reach $150 billion this year.
Tourism is another area where people exchange has increased tremendously. Koreans comprise the most number of tourists in the country, with almost 1.20 million arriving yearly.
In the latest report released by the Department of Tourism, there were already 423,366 arrivals from Korea just in the first four months of the year.
There is also a growing number of Koreans enrolled in Philippine universities for short and degree courses. Korea also emerged as the top visitor spender, with P4.13 billion, overtaking the US, which generated a total revenue of P3.60 billion.
Around 4 million Filipinos traveled to South Korea in 2013, a 20-percent increase from 2012, according to the embassy in Manila.
Interest has been heightened by increased exposure of Filipinos to Korean telenovelas and K-pop music. Visa requirements have also been relaxed, e.g., one needs to only present gold credit-card statements in lieu of complicated bank statements, among others.
It is also important to highlight that, under the Employment Permit System of the Korean Ministry of Employment and Labor, around 24,000 Filipinos are currently working in the manufacturing sector.
However, according to Philippine Overseas Employment Administration records, as of March 2014, there were already around 36,000 Filipino workers deployed in the Republic of Korea.
South Korea is also one of the country’s largest sources of foreign direct investments after Japan and the US. Korea’s total investment in the Philippines was estimated at $3.80 billion in 2013.
Major Korean companies doing business in the country include Korean Electric Power Corp., Phoenix Semi-Conductor, Hanjin Shipbuilding Co., Samsung, Hyundai and LG.
Among the investment areas that Korean firms continue to be interested are infrastructure, manufacturing, real estate and the tourism industry.
If the growth of the Philippine economy is sustained and a better investment environment is promoted by the next administration, it is expected that Korean investments will expand even more over the next few years.
In terms of official development assistance (ODA), Korean aid has also been increasing during the past years. According to National Economic and Development Authority statistics, South Korea has a total ODA of $608.72 million in 2013, comprising of $524.76 million in loans and $83.96 million in grants.
Loans are administered by the Korea Export-Import Bank, while technical assistances and grants are through the Korean International Cooperation Agency.
It is expected that the total Korean ODA to the entire Asean will double this year, as the Republic of Korea has vowed to give assistance in order to narrow the development gap among member-countries.
South Korea and the Philippines, through President Park Geun-hye and President Aquino, committed to further strengthen the economic partnership of the two countries in December 2014 during their bilateral meeting at the sidelines of the 25th Commemorative Summit of the Association of Southeast Asian Nations and the Republic of Korea in Busan, South Korea. This augurs well for the growth and prosperity of both countries.
Aldaba is the dean of the School of Social Sciences and professor of Economics, Ateneo de Manila University. Dr. Aldaba is also a senior fellow of Eagle Watch, the university’s macroeconomic and forecasting unit.