"ASEAN 5 Countries Surpass China in Trade Surplus Share... Need to Increase Consumer Goods Exports"

Bank of Korea Report... Ranked 2nd After the US Last Year
Vietnam and Malaysia Emerging as Key Trading Partners

Export containers are being loaded onto a ship at Busan North Port. Photo by Jinhyung Kang aymsdream@

Last year, the share of the five major ASEAN countries in South Korea's trade surplus significantly surpassed that of China. As trade with ASEAN countries becomes increasingly important, there are calls to also increase exports of consumer goods.

According to the Bank of Korea's report titled "Characteristics and Future Prospects of South Korea's Exports to the ASEAN 5" released on the 27th, South Korea's trade surplus with the ASEAN 5 last year amounted to $23.6 billion, ranking second after the United States' $44.5 billion. China, which had been South Korea's top trade surplus partner until 2019, saw its surplus decline annually and recorded a $18 billion deficit last year.

The ASEAN 5 refers to Vietnam, Malaysia, Indonesia, the Philippines, and Thailand?countries among the 10 ASEAN nations with a high export share from South Korea. As of last year, the ASEAN 5 ranked second after the United States in South Korea's overseas direct investment, reflecting their rising status in South Korea's trade.

Trade with the ASEAN 5 is mainly conducted by importing intermediate goods from South Korea, processing them, and then exporting final goods to advanced countries such as the United States or the European Union (EU).

By product category, semiconductors account for more than 20% of South Korea's total exports to the ASEAN 5, while other intermediate goods such as petroleum products and chemical products make up over 60%. In contrast, final goods like food and clothing represent about 5%.

By country, Vietnam accounts for 60% of South Korea's total exports to the ASEAN 5, with the other four countries each making up about 10%. Even in exports to Vietnam, semiconductors constitute 24%, while consumer goods account for only 4%, which is very low.

The Bank of Korea explained that this export structure focused on intermediate goods reflects the nature of South Korean companies' investments in the ASEAN 5, which are more oriented toward vertical production division based on cost advantages rather than market entry.

South Korea's exports to the ASEAN 5 are heavily influenced by demand from the United States and China, which import from the ASEAN 5 for their domestic consumption and production. Especially since the mid-2010s, the influence of U.S. consumption has greatly expanded. The Bank of Korea noted that South Korean intermediate goods exported to the ASEAN 5 are processed within the region and then mainly exported for final consumption in the United States or used as intermediate goods for production in China.

The Bank of Korea forecasts that South Korea's exports to the ASEAN 5 will continue to grow steadily amid a recovery in the IT sector, stronger-than-expected U.S. economic growth, and expanded investment in major emerging countries.

However, from a structural perspective, as the ASEAN 5's role as a global production hub becomes increasingly solidified, competition to secure market share in the import market within the region, centered on South Korea's major export items, is expected to intensify in the medium to long term.

Therefore, the report emphasized that while utilizing the ASEAN 5 as a production base, efforts should be made to qualitatively upgrade South Korea's key intermediate goods. At the same time, considering the growth potential of ASEAN's population and consumer market, attention should also be paid to increasing exports of high-quality consumer goods.

This content was produced with the assistance of AI translation services.