South Korean enterprises are expanding cooperation with Southeast Asia with the United States increasingly internalizing supply chains in various industries.
In Indonesia, POSCO Group is working with multiple local enterprises in the sectors including steel, construction and EV battery material development. For example, POSCO and Krakatau Steel will invest US$3.5 billion together until 2026 in order to build another blast furnace and a cold-rolled steel plant at PT Krakatau Posco.
In Malaysia, SK Group and Petronas subsidiary Gentari recently promised to work closely together in the hydrogen industry. They are planning to produce blue hydrogen and ammonia and launch a carbon capture and storage project in Malaysia. In addition, SEDC Energy launched its Sarawak clean hydrogen project in January together with Samsung Engineering, Lotte Chemical and POSCO Holdings.
According to experts, Southeast Asia has potential to replace China as a global manufacturing hub. “The ASEAN region is home to a population of 700 million and those in the age group of 20 to 54 account for 53.7 percent of the population,” one of them said, adding, “Manufacturing relocation to the region can lead to a lower level of dependence on China and a lower possibility of friction with the United States.”
According to the Export-Import Bank of Korea, South Korea’s direct investment in Indonesia hit an all-time high of US$1.8 billion last year. “Its investment in Southeast Asia was concentrated on Vietnam until recently, but it is diversifying to Indonesia, Malaysia, Myanmar and so on these days,” it explained.