‘The Posco project is not moving like we expected it to. But the ball is in India’s court’

In this Idea Exchange moderated by Deputy Editor Subhomoy Bhattacharjee,Korea’s Ambassador Joon-gyu Lee speaks about Korea’s FDI experience,strategic ties with India and why Gangnam Style has little to do with Korean culture

Written by Subhomoy Bhattacharjee | Published:October 7, 2012 2:52 am

In this Idea Exchange moderated by Deputy Editor Subhomoy Bhattacharjee,Korea’s Ambassador Joon-gyu Lee speaks about Korea’s FDI experience,strategic ties with India and why Gangnam Style has little to do with Korean culture

Joon-gyu Lee: Korea and India share a longstanding bilateral relationship. Except for the Cold War phase,relations between the two countries have been friendly and cooperative. India was the chairman of the UN Commission which successfully held the general elections in 1948 that led to the establishment of the Republic of Korea on August 15,1948. When the Korean War broke out in 1950,India was one of the 22 countries that joined the international effort for the establishment of peace on the Korean peninsula.

It might appear rather strange that despite a tradition of bilateral cooperation and considerable goodwill,the two countries began to drift apart in the following decades. Following the outbreak of the Cold War,India emerged as a guiding light of the Non-Aligned Movement,while Korea maintained the US-Korea alliance to defend its democracy against external security threat. On the economic side,India adopted an inward-looking import-substitution model of development,whereas Korea consistently pursued an outward-looking export-oriented development path and opened up its market to the world.

Things began to change in the early 1990s due to the end of the Cold War and the failure of India’s import substitution policy. This motivated India to reorient its economic and foreign policy. India announced its new economic policy and a Look East Policy,the most important foreign policy initiative in the recent past. Around the same time,Korea emerged as an industrial power. As a result,our two-way trade and investment ties surged. The real turning point in our relations came in January 2010 when President Lee Myung-bak paid a historic state visit to India. We saw the upgrading of ties coupled with the effectuation of the Korea-India Comprehensive Economic Partnership Agreement (CEPA) which set the course for rapid development of bilateral relations.

Over the past two years,trade between the two countries has registered a phenomenal growth of almost 70 per cent. Today,Korean investment in India stands at around $3 billion,while Indian investment in Korea is more than $1 billion. Korean steel giant POSCO’s $12 billion investment in a mega steel project in Odisha,if realised,remains not only the single largest overseas investment by a Korean company but also the single largest foreign direct investment ever made in India. This December,we are opening the Korean Culture Centre here in Delhi. Next year,we celebrate 40 years of the establishment of diplomatic ties between the two countries.

Coomi Kapoor: South Korean businessmen have often said they face problems in setting up their businesses in India. What is the difference in the work ethic of India and South Korea?

It is important for Korean businessmen to understand the differences in India if they want to do business here. We should not shy away from the differences,but try to understand them and make the best of them. The success stories of Hyundai Motors,Samsung,LG have come by taking the differences into account and making friends with Indian workers.

Anil Sasi: How much of a disappointment is the lack of progress on POSCO?

The POSCO project is not proceeding like we expected it to. But POSCO says that there is nothing for them to do but wait for the final decision of the Indian government and only after all the procedures are complete can we proceed with the project. So the ball is in India’s court.

Surabhi: Media reports suggest there are protests in South Korea against hypermarkets set up by businesses within the country. This is similar to protests in India against FDI in retail.

It is not similar. The issue in Korea is at the second stage,you are at the first stage. Multi-brand retailers are doing business in Korea already. Now Korea is allowing multi-brand retailers to open up smaller establishments in residential areas. This might be a very big threat to a very small size of retailers. This is leading to big arguments in Korea.

Surabhi: What can India learn from your experience?

Opening up is a must for developing one’s economy. The Korean government has continuously tried to open up its economy. There has been a very strong resistance but it was the right decision for Korea’s development. When we open our economy,our economy flourishes. In 1997,we were badly hit by the international financial crisis. Korea escaped the crisis,partly by opening up all aspects of the Korean economy. Of course,we had some painful experiences. Some people suffered heavy damages from opening up the economy. But we have to admit that we cannot develop our economy without such sacrifices.

Monojit Majumdar: The argument is that 5-6 companies control all hypermarkets. They are selling not only electronics,cars etc.,but also chicken and rice that poor Koreans eat. They threaten the small shop-owners. Is this a concern at all?

There is some criticism that these big companies are taking over the business of smaller groups. But on the other hand,Korean big business groups are contributing greatly to Korea’s economic development. They are creating jobs and money for Korea. What we should do is to solve the problems arising out of big business monopolies. Elections will be held in December this year. One of the main topics of debate is how to deal with big business groups.

Manu Pubby: On the Japan-China dispute over the Senkaku islands,do you think the re-balancing of forces,as US has promised in the Asia-Pacific region,will act as a deterrent to a conflict? China’s statements are more assertive since this rebalancing has been announced.

The recent conflict between China and Japan should be seen in the context of the grand rivalry between US presence and China’s expansion. But China is not ready to compete with USA,not yet. China is expanding its nuclear power,China is expanding its naval power,but I don’t think it’s ready to compete with the US navy at sea. The present issues between China and Japan have a historical background,which is hard to understand for outsiders like us so we cannot say which country is right or wrong. But I don’t think they’ll go to war over them. These territorial issues have a domestic political background,especially in Japan. Territorial issues cannot settle down in a short span of time. A territorial dispute is very good for politicians to play games in domestic politics.

Dilip Bobb: Where does South Korea stand on the territorial dispute between the two countries?

The relationship between Korea and Japan is very complex. We have been neighbours for thousands of years,and we have many good and bad memories. Bad memories date back to the 16th century,when Japan invaded Korea. Japan was successful in colonising and occupying Korea for 35 years. This is a very bad memory for Korea. After the second World War,we wanted our Japanese friends to apologise from the bottom of their hearts,which they have never done. That is the origin of the friction between Korea and Japan. But we are neighbouring countries and Korea needed Japan’s help after the Korean War to construct our national economy. Japan helped Korea. Without Japanese help,Korea could not have had this kind of economic success. We have a very close relationship in many fields,including the military.

Manu Pubby: Over the last 4-5 years,India has developed good military ties with Japan. What makes India,so far away from South Korea or Japan,such a great military alliance for you?

Upgrading our partnership on the military side will be very beneficial for both countries. India has good knowledge of this region,Korea has good knowledge of northeast Asia. Exchange of information between us will be very beneficial. India has begun to get engaged in East Asia,India has become a member of the East Asian summit. Korea can be a good friend for India in its engagement with the East Asian forum.

Y P Rajesh: Does South Korea see any hope for the improvement in relations with North Korea following the leadership change there or at least a reduction in tension?

We hope so. We have waited for North Korea to change but we have not seen that yet. We are watching them very closely in the hope that they will change in a positive manner. South Korea,North Korea had been one country for thousands of years. Most of us still think that this division makes no sense. Some day we should be united again. But right now,our first concern is not reunification. It is keeping the stability and the peace on the Korean peninsula. We will not sacrifice stability and peace in pursuit of reunification. Hence,we have been asking them to abandon nuclear weapons. That is the first step towards a constructive exchange between South Korea and North Korea. South Korea is a rich country. We are ready to invest in North Korea,assist in their endeavour to reconstruct their economy. For this,they should abandon nuclear weapons and open up their economy.

N P Singh: What can be done to bring down the Berlin Wall between North Korea and South Korea?

The collapse of a kind of Berlin Wall is something we do not want to see in our region. A sudden collapse of North Korea will not be helpful to South Korea. We want slow and steady changes. If there is any kind of chaos in North Korea,that would not be welcomed by us,China,USA or anybody else.

Dilip Bobb: What is the view in South Korea on the battle between Samsung and Apple?

We think Apple is not going about this in the right way. Apple should try harder to develop their skills. If we are going to make phones,there are hundreds and thousands of patents on the rise. Samsung can tell Apple that you are using my patent,Apple can say that to Samsung,too. I personally believe there should be a compromise between the two companies.

Amitabh Sinha: One of the most important points in the joint statement that came out of the Indian PM’s visit to South Korea earlier this year,was cooperation in nuclear technology and an invitation to set up more nuclear power plants in India. There have been protests in Kudankulam against the nuclear power plants and in Maharashtra and Haryana. What is South Korea’s view on the protests against nuclear power plants?

If,without constructing nuclear plants,you can provide people with good power supply,you should do so. In South Korea,we do not have an alternative. I think India has the same problem. The protests don’t mean much by themselves. In South Korea,there are many NGOs that continuously protest against nuclear power plants. The people are accustomed to it and we do not take it too seriously. We are ready to cooperate in this field with India,but we are still waiting for India’s decision to proceed in that direction. Korea has developed its own technology,we have our own model of nuclear power plants based on sophisticated technology. India has its own technology. There is room for Korea and India to cooperate in this field.

Subhomoy Bhattacharjee: The Korean business establishment used to be dominated by large business houses. There was a lot of discussion about the connection between business houses and the political establishment. We have a similar debate right now in India.

I am not sure about the connection between business and politics,but many Korean people think that there used to exist a very close and sometimes dirty relationship between politics and big business. But I cannot be sure how bad or big it was. In Korean politics these days,there is no such connection. These days,giving out very small sums of money becomes very big news,a scandal in Korea and therefore,bad politics. But it took a lot of time for Korea to reach this stage. Bribery,rotten politics is not good and should not be tolerated.

Karen (Mount Carmel School,Delhi): What are the main challenges facing Indo-South Korean relationship?

I do not see any big challenges. There is no conflict of interest at all. We do not have territorial disputes,we are not neighboring states and do not have a history for which we should apologise. There are many fields in which we can cooperate.

Pallavi Chattopadhyay: Can you explain the sudden YouTube popularity of South Korean artist PSY’s Gangnam Style and its connection with Korean culture?

There is something we call the Korean wave. Korean popular music and movies have been increasingly popular,first in China,Southeast Asia and now they are spreading as far as South America and even the US. We thought the spread of the Korean wave was fleeting. We thought it would continue for a couple of years and then disappear but it continues and we are surprised with the speed with which it’s spreading. PSY is not a popular singer in Korea,he is old. Korean youngsters do not even know his name. He popped up from outside Korea. It is hard for us to connect with him. This is something of PSY’s own making,it has little to do with Korean culture.

Aleesha Matharu (EXIMS): Is the rich-and-poor debate that’s reflected in the song an issue in South Korea?

That the gap between the rich and the poor is widening is an argument by the critics in Korea. This is one of the main topics to be dealt with in the upcoming election.

Transcribed by Geeta Gupta & Ananya Bhardwaj

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