Lee Jae Myung’s Southeast Asia Policy: Can It Move Beyond Its Vietnam Focus?

On 4 June 2025, Lee Jae Myung assumed South Korea’s presidency following a period of intense domestic political turbulence, during which his predecessor, Yoon Suk Yeol, was successfully impeached and removed from office for having imposed martial law. Although the Lee administration has yet to articulate a comprehensive foreign policy, including towards Southeast Asia, its initial actions suggest a continuation of South Korea’s traditional Vietnam-centricity.

On 11 August, Lee hosted Vietnamese Communist Party General Secretary To Lam as his first state guest. The visit resulted in the signing of 10 memoranda of understanding (MoUs) encompassing collaboration in nuclear and renewable energy, financial policy, and scientific innovation. Both nations also committed themselves to deepening economic cooperation, aiming to increase bilateral trade from US$86.6 billion in 2024 to US$150 billion by 2030.

That Lee chose to host To Lam as his first state guest is not surprising, given that South Korea’s engagement with the region has predominantly revolved around Vietnam.

South Korea’s trading relationship with Southeast Asia has been heavily focused on Vietnam. The 2015 Vietnam-Korea Free Trade Agreement operates in tandem with the ASEAN-Korea Free Trade Agreement, providing both countries greater flexibility to offer incentives in the areas of goods and services, thereby deepening their commercial partnership. Between 2015 and 2023, South Korea’s trade with Vietnam amounted to nearly US$640 billion, exceeding the trade volume with any other Southeast Asian country by a substantial margin (Figure 1).

Figure 1. ROK’s Trade with ASEAN Member States, 2015 – 2023 (US$ million)

A further examination of South Korea’s trade patterns from 2015 to 2023 shows that, on average, trade with Vietnam accounted for 45 per cent of the former’s total trade with ASEAN. This disproportionate share illustrates the degree to which ROK-ASEAN trade is concentrated in a single partner (Figure 2).

Figure 2. ROK’s Trade with Vietnam and ASEAN, 2015 – 2023 (US$ million)

Likewise, between 2015 and 2023, South Korea’s foreign direct investments (FDI) in Vietnam, amounting to over US$25 billion (Figure 3), were significantly higher than its FDI in other countries in the region. Factors such as low labour costs, cultural affinity, geographic proximity, and an established supply chain within the country have well-positioned Vietnam as a key investment destination for Korean multinational corporations.

Figure 3. ROK’s FDI to ASEAN Member States, 2015 – 2023 (US$ million)

Given that foreign aid is often employed by donor countries as a tool to advance their economic interests in recipient nations, it remains unsurprising that Vietnam continues to receive the largest share of foreign aid from South Korea (Figure 4).

Figure 4. ROK’s Financial Aid to Southeast Asia, 2019 – 2023 (US$ billion)

South Korea’s close relationship with Vietnam is evident in its people-to-people ties as well. Among Southeast Asian countries, Vietnam sends the largest number of visitors to South Korea. (Figure 5). Vietnam is also the most favoured travel destination for Korean tourists. In 2023 and 2024, Vietnam recorded 3.6 million and 4.6 million Korean tourist arrivals, respectively. Also, the Vietnamese population remains the second-largest non-Korean group in South Korea, with about 340,000 Vietnamese people estimated to reside in the country, while some 190,000 Koreans live in Vietnam. Lee thus described the two countries as “countries of in-laws”.

Figure 5. ASEAN Visitors to Korea (Thousand Persons)

In sum, South Korea’s policy towards Southeast Asia has, in substance, remained focused on Vietnam, though often taking on different names and frameworks. This persistent imbalance does little to advance broader ASEAN-ROK relations or improve perceptions of South Korea in the region. According to the State of Southeast Asia Survey 2025, Southeast Asia collectively ranked South Korea only seventh in terms of strategic relevance, while respondents from Vietnam ranked the country at sixth place, underscoring the limited regional reach of such a narrow focus. The Lee administration should consider rebalancing its Southeast Asia strategy by fostering more diversified engagement with the region.

With its stated ambition of becoming the fourth-largest arms exporter by 2027, South Korea can take advantage of a favourable window of opportunity as countries in the region import less from traditional suppliers like Russia.

For one, South Korea can ensure that its aid to the other Southeast Asian countries remains robust, particularly in the wake of the suspension of USAID under the Trump administration and the global trend of advanced economies cutting their foreign aid budgets. The ROK’s National Assembly has cut US$59 million from the budget previously allocated for official development assistance projects, including 35 billion won (US$25 million) intended for Cambodia. While these cuts are partly a consequence of heightened scrutiny following broader investigations into Yoon Suk Yeol’s alleged misuse of funds, the Lee administration might want to safeguard South Korea’s credibility in the Global South by preserving its identity as a “recipient-turned-donor middle power”.

South Korea could consider expanding its engagement with ASEAN to include the security domain. Traditionally, South Korea has maintained a muted posture on contentious security issues, notably the South China Sea disputes. In recent years, however, it has shifted from its long-standing neutrality on the issue to, on several occasions, spotlighting China for its aggressive behaviour and voicing support for claimant states like the Philippines. The South China Sea maritime dispute remains a central security concern in Southeast Asia, and by maintaining this shift through sustained rhetorical support, the Lee administration can reinforce South Korea’s commitment to upholding regional security.

Another possible low-hanging fruit for South Korea to bolster security relations with ASEAN is through arms sales. While the country’s arms sales to the region have been decreasing under the Moon and Yoon administrations (Figure 6), the Lee administration could aim to reverse this trajectory. With its stated ambition of becoming the fourth-largest arms exporter by 2027, South Korea can take advantage of a favourable window of opportunity as countries in the region import less from traditional suppliers like Russia.

Figure 6. ROK’s Arms Transfers to Southeast Asia, 2015 – 2022

In 2024, ASEAN and South Korea celebrated the 35th anniversary of their dialogue partnership. While the partnership remains valuable, South Korea’s policy towards Southeast Asia should evolve to a more diversified and balanced one so that it can assert itself as a credible middle power that can be relied upon in the current geopolitical environment.

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