With this in mind, the bank launched its FDI advisory centre in Seoul on March 27. The centre, its 11th, builds on the dedicated Korea desk established in Singapore in 2023. “South Korea is one of Asean’s top trading partners and a leading investor in Southeast Asia. FDI flows from South Korea into Southeast Asia have grown significantly in recent years, driven by companies’ strategic expansions into key markets such as Indonesia, Vietnam and Singapore,” says Wee Ee Cheong, deputy chairman and CEO of UOB.
The opening of its latest centre is a matter of being in the “right place” at the “right time” with the “right partners,” says Sam Cheong, UOB’s head of group FDI advisory. Beyond recognising these key factors, he highlights that the launch coincides with UOB’s 40th year in South Korea, the 50th anniversary of bilateral ties between Singapore and South Korea, and UOB’s 90th anniversary.
He adds that before the launch of its latest centre, the bank had already begun engaging the South Korean market six years ago and was speaking with its partners like Seoul-headquartered law firm Kim & Chang.
“We do see [that] there’s a need for all these Korean companies, even the large corporates, as they pivot towards Southeast Asia. Many of them are coming in [the region] with new products [and] new services,” he tells The Edge Singapore in an interview after the centre’s official launch in Seoul.
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South Korea and Asean synergies
These companies recognise the growth potential within Asean. In 2024, Korea’s GDP grew by 2%, trailing behind the Asean-5’s projected full-year growth of 4.5% and Southeast Asia’s 4.7%.
“You’re talking about growing in a market that’s two times faster than Korea,” says Cheong. Another challenge faced by Korean companies is their ageing population, unlike Southeast Asia’s young and growing population, which is tipped to grow to 720 million by 2030.
Asean’s proximity to South Korea further enhances the appeal of the region, where opportunities align seamlessly with South Korea’s strengths in renewable energy, particularly solar and wind power. These sectors are in high demand across Asean, as many countries seek to accelerate their efforts to meet net-zero emission targets by 2050.
Additionally, South Korea’s tech companies may look to capitalise on Asean’s rapidly growing digital economy, which is forecast to contribute around US$1 trillion ($1.3 trillion) to the region’s GDP by 2030.
A guiding hand
Despite the interest in the region, Korean companies require help with navigating “unknown certainties” as well as Asean’s “rapidly changing market”.
“So, how do I navigate? Why should I participate? Yet, many of them also do not want to miss the boat,” Cheong adds. “They want to make sure that they are on top of the situation.”
This is where UOB steps in. Having been in the FDI business for 14 years and given its relationships with government agencies such as Invest Johor, MIDA (Malaysian Investment Development Authority), The Eastern Economic Corridor Office of Thailand (EECO), as well as companies, makes “a lot of difference”.
It is this “unique understanding” and familiarity with Asean that puts UOB ahead of the curve. After all, when going to new markets, companies will need a partner that is able to guide them in not only one market but in multiple markets, Cheong adds. When investing in Asean, investors will also need to be familiar with and leverage certain countries’ free-trade agreements (FTAs) or comprehensive strategic partnerships, which can help them minimise their taxes.
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In response to sustained strong interest, the bank recognised the need for a dedicated Korean desk, established in 2023. With this new team in place, the bank experienced continued growth in both interest and business, as its ability to engage with clients and prospects in Korea significantly strengthened its connections.
This year, UOB is already seeing a “strong pipeline” in its Korean FDI business. Cheong says it is “confident” that the bank will grow its Korean FDI business by 50% from last year. The scale of the firms that the Korean companies are looking at is “not small” and is, in fact, “quite significant”, adds Cheong. They range from familiar names, which are looking to expand their presence in Southeast Asia, to large corporates, as well as mid-sized businesses defined as those with an annual turnover of $100 million.
These mid-sized companies are family-owned and privately owned, and they are also looking to expand into Southeast Asia with their brand, says Cheong. “I guess this part was strongly supported by the K wave. And the K wave made it easier because, you know, like cosmetics, like Dr G, everyone now is very familiar [with], starting from Innisfree. So that K wave has further made [the] Korean brand a lot more appealing to the young population in Southeast Asia, and this is where I find it even more exciting,” says Cheong.
Many of these companies are new brands that are already seen in Singapore, like the athleisure brand Andar, which is “also very competitive, very appealing and good quality”. He adds: “This is another way that complements the larger corporate that’s already been there and continues to expand.”
UOB’s ecosystem
As UOB has a smaller presence in South Korea compared to Asean, Cheong says that the bank focuses on building relationships with government agencies in local markets and partnering with regional banks. In South Korea, Woori is one of UOB’s key partners.
“This is the approach that we have been adopting because there’s no way we will be able to build, like, you know, hundreds of branches like in Thailand, right? But we believe in partnership. That’s why we also work with all the government agencies in Korea,” he says.
Through the development of a local ecosystem within the country, Cheong says the bank doesn’t require a lot of branches if it is already working with the best in the field. However, the bank enjoys a good brand name, and through these FDI centres, it reinforces its commitment to connecting Korean companies to Southeast Asia, which goes beyond banking.
On the current political situations in Southeast Asia and South Korea, Cheong is unfazed as politics is always an “unknown factor” and “it happens” over the decades. From a business perspective, however, South Korean companies know they will need to pivot overseas, which is the “key thing”.
“As I mentioned, Korean companies know that they need to find growth. Where can you find growth? And where is the market that they have a higher chance of achieving the growth that they need? Asean.”
Ruhizam Idris, director of the Malaysia Investment Development Authority (MIDA) in Seoul, has already seen about 10 queries from interested Korean firms seeking to establish a presence in the Johor-Singapore Special Economic Zone (JS-SEZ). Ruhizam, who was a panellist at the Korea-Asean Business Forum, was speaking to journalists on the sidelines of the forum held in Seoul on March 26. The discussion was co-organised by UOB, PwC and Seoul-headquartered law firm Kim & Chang, alongside partners such as Singapore’s Economic Development Board (EDB), Indonesia Investment Promotion Board, Thailand’s Board of Investment, MIDA, the Vietnam Embassy in Korea and the Korea Trade-Investment Promotion Agency.
For Ruhizam, these investors are looking at the JS-SEZ’s logistics sector, in particular, warehouses, as they want to take advantage of Singapore’s connectivity to the rest of the world while leveraging Johor’s “world-class” infrastructure, including the Malaysian state’s industrial parks.
During the forum, Ruhizam informed potential investors that the Malaysian government could offer “customised incentives”, which he later clarified could include various factors, such as the duration of the reinvestment allowance, depending on the strategic importance of the investor’s project to Malaysia. These incentives extend beyond tax breaks, also covering areas like talent development and exemptions from import duties on components and raw materials.
Onercera’s Asean move
Dr Park Jay Suk, dental practitioner, CEO and founder of the dental implant company Onecera, is among the investors looking to expand into Asean. Currently manufacturing its implants in South Korea, Onecera plans to open a second factory in Singapore, primarily driven by the more favourable corporate tax rate. While South Korea’s corporate tax rate stands at 24%, Singapore offers a flat rate of 17%.
Park also plans to establish an education centre in the city-state, driven by the strong demand for the company’s services. If successful, the factory would span 6,000 sq ft to 8,000 sq ft, similar to its size in South Korea.
However, all these plans may be shifted up north to Johor Bahru due to cost. “Actually, I want my dental implants [to be] manufactured in Singapore to begin with. But then, I [was looking] for my manufacturing company site… [and found that property prices were] too expensive,” he says. Instead, Park is now looking north, where costs are approximately a third lower due to the exchange rate.
While Onecera already has distribution agents in the Philippines and Vietnam, Park believes distributing to Asean through Singapore will be “much easier”.
