Korean, Japanese businesses to boost partnership via Future Partnership Fund

Press conference on the progress of the Future Partnership Fund at the headquarters of Keidanren in Tokyo, Japan on May 10. [Photo provided by FKI]

The business circles of South Korea and Japan are accelerating moves to seek economic cooperation after the resumption of shuttle diplomacy, the first in 12 years, where the leaders of the two countries travel back and forth for discussions.

On Wednesday, Kim Byong-joon, acting chairman of the Federation of Korean Industries (FKI), and Masakazu Tokura, chairman of the Japan Business Federation, also known as Keidanren, held a press conference on the progress of the Future Partnership Fund at the headquarters of Keidanren in Tokyo, Japan. The steering committee of the fund is being formed and it will offer financial resources for economic cooperation.

The two groups have agreed to jointly secure rare mineral resources in third countries and strengthen the semiconductor supply chain.

The business groups define the purpose of the economic cooperation as “economic security.”

“Korea is home to global companies such as Samsung Electronics Co. and SK hynix Co., and Japan has a high global market share in materials, parts, and equipment,” Tokura said.

“Cooperation in the area is significant as chips can be produced only when Japan’s competitive edge in materials, parts, and equipment is combined with Korea’s design and mass production capabilities,” he added.

The two groups also decided to beef up the semiconductor supply chain by including not just Korea and Japan but also the U.S. and Taiwan.

Resources and energy were also mentioned in the context of security.

“It is most important to decide how we will secure rare mineral resources such as lithium for the manufacture of secondary batteries,” Kim said.

“Korea and Japan will make joint efforts to secure rare mineral resources from other countries amid a growing tendency to nationalize them.”

Kim Byong-joon, acting chairman of the Federation of Korean Industries, left, and Masakazu Tokura, chairman of the Japan Business Federation [Photo by Yonhap]

The two business groups also agreed to work together to respond to industrial changes such as digital transformation, green economy, and promotion of entertainment and content sectors.

Exchanges between universities of the two countries will also be promoted. Korean high school teachers will also be invited to Japan with internship opportunities.

The Future Partnership Fund will be used to fund these efforts as both sides have agreed to raise 1 billion won ($756,430) each.

The issue, however, is whether companies involved in war crimes during the Japanese occupation of Korea such as Mitsubishi Heavy Industries Ltd. and Nippon Steel Corp. will participate in the fund.

“We have no intention of either involving or excluding Mitsubishi Heavy Industries and Nippon Steel (in fundraising),” Tokura said. “We will solicit funds from all businesses (in Japan) and it will be up to each business whether they will join funding or not.”

It also draws attention if Korea’s major four conglomerates, namely Samsung Electronics, SK, Hyundai Motor Co., and LG, will join the fund as they are not members of the FKI.

“The fund is open to all, including the public, industrial sectors, and businesses,” Kim said.

“We will have to see which companies will voluntarily participate, but there’s no reason why any company, regardless of their FKI membership status, would not join the cause of enhancing the economic competitiveness of the two countries.”

The two business groups, in the meantime, will be holding an industry cooperation forum in Seoul in July.