Singapore has long recognised the value of establishing and maintaining strong ties with both its neighbours as well as the rest of the world, in contrast to the wave of global protectionism at the forefront of many nations’ foreign policies today. Our country’s collaborative and partnership-focused disposition towards other economic superpowers was on display during South Korean President Moon Jae-in’s visit in mid-July, with the signing of six Memoranda of Understanding (MOUs) to expand cooperation on several vital fronts.
A major step forward in both countries recognising the potential of their complimentary economic structures, the penning of the documents will see an increase in bilateral trade and corporation between the two Asian nations:
The agreements in a nutshell
The inking of the six MOUs focused on the areas of trade, investment, industry, energy, environmental cooperation, as well as small-and-medium-sized enterprises (SMEs) and start-ups. The two nations will also be launching a review of the implementation of their existing Free Trade Agreement within six months, focusing on the liberalisation of tariffs.
Both Singapore and South Korea also reiterated their commitment towards the Regional Comprehensive Economic Partnership, an ASEAN-led trade pact that includes Australia, China, India, Japan, South Korea and New Zealand, which is another positive development for economic ties within and across the region.
During Moon’s recent visit, Singapore’s Prime Minister Lee Hsien Loong also emphasised the complementary strengths of both nations as well as the desire to deepen mutual investment while strengthening ASEAN’s relationship with South Korea, “We also welcome Korean companies to take advantage of Singapore to expand into the ASEAN region.”
Building upon a thriving entrepreneurial relationship
Two of the abovementioned MOUs signed in July were aimed at facilitating opportunities between both nations in the start-up and technology space. Enterprise Singapore signed one MOU with Korean Ministry of SMEs & Startups (MSS) and another with the Korea Trade-Investment Promotion Agency (KOTRA) to explore possibilities for co-innovation, provide investment, and promote cross-border expansion.
An example of a Korean business that has appreciated the synergies that our nation has to offer is the Korea-Singapore Healthcare Incubator based at technology and innovation business club, SPECTRUM. The incubator, that set out to develop up-and-coming Korean medical technology (MedTech) companies, houses 10-15 Korean startups and SMEs of varying net worth. Singapore’s Golden Equator offers its comprehensive ecosystem including Capital, Consulting, and Community, while its Korean regulatory and clinical research counterpart, C&R Healthcare Global, identifies and financially supports these Korean companies looking to expand into the ASEAN region via Singapore.
Southeast Asian region to benefit from new collaboration
Mid-July also saw a milestone that will prove to be pivotal for the relationship between Singapore and Korea’s start-up and tech investment lansdcape. A S$120 million investment fund was launched by local Fund Manager Golden Equator Capital and Korea Investment Partners, a Seoul-headquartered venture capital and private equity firm.
The GEC-KIP Technology and Innovation Fund will invest in Series A and Series B high-growth tech companies with average ticket size between S$2 million and S$5 million, while a small proportion of the fund reserved for South Korean companies looking to expand into the region via Singapore, further cementing and creating collaborative opportunities that will positively impact the region’s start-up scene.
The relationship moving forward
With both countries displaying a strong commitment towards continued collaboration, we can expect South Korean’s national interests in Singapore to only rise over the span of the foreseeable future.
One area where Korean businesses have been increasingly looking to Singapore for their expansion is across the cryptocurrency industry, especially after their country took a hard stand on Initial Coin Offerings in 2017. Aside from the favourable tax environment and business-friendly environment here, our local government’s rather measured approach has provided these companies with a location to raise funds and establish these businesses.
An example of this is JENGA K, a company that helps incorporation, marketing, legal, business support for Korean blockchain companies looking to establish presence in Singapore.
The fact that Prime Minister Lee and President Moon mentioned amendments to their double tax avoidance agreement only points to further advantages in the pipeline for such companies making the move.
With the Korean Peninsula experiencing increased economic and political uncertainty, it’s only natural for the nation and its businesses to cast their net further towards other Asian powers to maintain stability, with Singapore promising to be an economic partner with all the right ingredients for continued success moving forward.