This strategy outlines a vision of where Australia's relationship with South Korea should be in 2025 and how Australia should get there.
Over the past 50 years, South Korea has successfully transformed its economic landscape. Since the devastation of the Korean War between 1950 and 1953, the country has developed the world’s 12thlargest economy based on purchasing power parity (PPP), with a gross domestic product (GDP) of $1.6 trillion. It has achieved this with a population of 49 million people occupying a mountainous peninsula less than half the size of Victoria.
South Korea’s largest companies – led by Samsung, Hyundai and LG – now sell to customers across the world. Based on current trends, South Korea’s GDP per capita will reach parity with Japan’s by 2020.
South Korea’s economic transformation has been matched by dramatic changes in its political and international engagements. Despite the continual threat of renewed war on the peninsula during the past 50 years, South Korea has emerged from two decades of harsh military rule to become one of Asia’s most robust and vibrant democracies. The country has revived its rich cultural heritage, which was oppressed in colonial times, and its artists are making strong, distinctly Korean contributions to worldwide culture.
South Korea approaches 2025 with substantial assets. These include minimal government debt, plentiful foreign exchange reserves, a skilled and adaptable workforce, cutting-edge industrial technology and strong product development expertise. Its innovative firms are well integrated into vast regional, offshore production and supply chains, which South Korea uses to produce must-have consumer products such as smartphones and tablets, as well as sophisticated heavy-industry products.
Australia and South Korea already enjoy a strong trade relationship worth $32 billion, based on our complementary economic structures. Australia has been a reliable supplier of raw materials for South Korea’s high-tech manufacturing and heavy industry sectors for many decades. Despite strong competition from developing suppliers, Australia now provides two-thirds of South Korea’s iron-ore imports and 40 per cent of its coal. South Korea in turn supplies products such as Hyundai and Kia cars, Samsung smartphones and LG appliances to a growing Australian market.
However, there is still significant untapped potential in the economic relationship between Australia and South Korea. Only a small number of firms in Australia have an investment presence in Korea, and vice versa. Greater mutual investment would benefit both countries: Australia would gain access to South Korea’s technical expertise in resource development and high-tech manufacturing, while South Korea would gain access to Australia’s world-class service providers.
Australia’s advanced financial market has much to offer South Korea, just as South Korea’s liquid pension funds can help support Australia’s infrastructure financing needs. There are also opportunities for companies in Australia and South Korea to collaborate more closely in regional supply chains and developing markets.