25 May 2024, NIICE Commentary 9163
Mira Rai
The year 2024 marks the 50th anniversary of establishing diplomatic ties between Nepal and the Republic of Korea (ROK). Both countries celebrated it by organizing various events and celebrations with the hope and belief that Nepal- Korea friendship will grow stronger in the future. With the growing global economy and influence ranking as the 7th largest in the world, South Korea has recently emerged as a middle power that fosters goodwill, friendship, and collaboration among nations. Nepal has also reaped benefits from Korean economic development, with Korean companies making significant investments in the country, ranking as its fourth-largest foreign investor. Similarly, many Koreans visit Nepal annually to hike mountains or visit Lumbini, the Buddhist pilgrimage site and birthplace of Buddha. Despite being two distinct nations, there are cultural similarities that have strengthened ties between Korea and Nepal.
Ties that Bind Nepal and Korea
Since the establishment of the Korean Embassy in Kathmandu on 15 May 1974, and the opening of the Nepalese Embassy in Seoul in 2007, Korea and Nepal have enjoyed friendly relations. Over the years, they have strengthened their diplomatic and bilateral ties. In 2014, marking the 40th anniversary of their diplomatic relations, Nepal appointed an honorary consul in Busan. Both countries have signed various agreements related to trade, investments, aid, and grants, and have conducted frequent visits at all levels to enhance their relationship. Additionally, in October 2001, Nepal and South Korea established a framework for foreign minister consultation to strengthen their bilateral ties. Over the years, they have concluded several agreements to enhance cooperation, including the Agreement on Korean Youth Volunteers in January 1992, the EDCF Agreement in September 1997, the Agreement on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income in October 2001, the Air Services Agreement in March 2005, and the Culture Agreement in April 2005. Similarly, in 2007, the Nepal and Korean Governments signed an MOU on the Employment Permit System (EPS), for recruiting Nepalese workers according to the Korean labor-related law (International Economic Cooperation Coordination Division, 2014). Despite diplomatic relations being established in 1974, significant cooperation from South Korea began after the signing of the Agreement on Korean Youth Volunteers in 1992.
Development Cooperation in Nepal
The Republic of Korea’s journey from poverty to development, and from being a recipient to a donor country, is viewed as a successful development model. Over the last 50 years, South Korea’s major assistance sectors in Nepal are water management, health, sanitation, education, energy, and rural development. Moreover, several Korean private sectors have invested in Nepal, particularly in the hydropower sector. The Upper Trishuli-1 project is one of the most significant projects, along with initiatives like the Modi Khola Hydropower Plant, Chameliya Hydropower Plant, and the construction of a 132kV transmission line. Likewise, the Korean Government has been carrying out several development projects through the Korea International Cooperation Agency (KOICA).
KOICA’s ODA (Official Development Assistance) to Nepal
Since 1991, KOICA’s ODA to Nepal has been providing bilateral assistance, particularly evident during the massive earthquake in April 2015 when the Korean government provided USD 1,224,942,300 to support Nepal’s recovery and reconstruction efforts. Currently, KOICA’s country partnership strategy for Nepal (2020-2024) aims to contribute to poverty reduction and economic growth, helping Nepal transition from Least Developed Country (LDC) status to Middle-Income Country. KOICA is implementing various projects, including the Integrated Rural Development of Nepal through strengthening the Research and Development capacity of Kathmandu University (2017-2023), empowering rural communities in Nepal through an integrated approach to health and income growth (2020-2025), Capacity Building for (Technical and Vocational Education and Training) Model Institute in Madhesh Province to cultivate a skilled workforce in the construction sector (2021-2026), establishment of Cyber Bureau with Capacity Building for Nepal Police (2021-2026), and Project for Strengthening Stage-Wise Support System for the Stable Reintegration of Korea Returnee Migrants in Nepal (2022-2028) have been contributing somewhat to enhance development. Similarly, the Dispatch of Korean Volunteer and Capacity Building Program are other two prominent technical assistance programs to Nepal that KOICA has been implementing for a long time.
South Korea and Nepal’s Shared Interest
In addition to development cooperation, Korea has also emphasized the cultural affinity and bond that has existed as a heritage of Buddhism for centuries between the two countries. From a religious standpoint, Lumbini holds a special significance for Koreans, who have built a temple there. The foundation of Nepal-Korea relations can be seen as cultural as well as socio-economic cooperation. This cultural and religious affinity is also evident in the Lantern Festival, which has been held continuously since 2013. Korea connected its sacredness with Lumbini and devised a plan to bring the Peace Torch from Lumbini to Korea during the Lantern Festival. This year too, on May 11, Korea celebrated the Lantern Festival 2024 on the auspices of Buddha’s birthday, where South Korea and Nepal joined the festival by highlighting the message “Buddha was born in Nepal” while showcasing their cultural heritage by wearing traditional attire.
New Dimensions and Challenges Ahead
With the deepening of bilateral ties between Korea and Nepal, labor migration has surged, driven by the Korean wave, influencing Nepalese society in various ways. More Nepalese individuals are eager to travel to Korea for foreign employment due to higher salaries and increased quota for employees.
However, a recent controversy arose when two young men were killed in clashes between the police and protesters. Hundreds of youths, who had previously failed the language proficiency test for shipbuilding jobs, demanded the opportunity to take a separate test for manufacturing roles. Despite their protests, they were not allowed to do so under Korea’s policy. Incidents like these have presented challenges to Korea’s policies and raised concerns about how it should respond to them. In addition, the efficiency of Korea’s ODA is also a key challenge for both Nepal and Korea. Even though the establishment of KOICA has led to various development projects aimed at improving infrastructure and human resource capacity in Nepal, and has made positive contributions to Nepal’s development but challenges such as poor infrastructure and slow industrialization still persist. Despite several efforts, the overall impact of Korean aid on Nepal’s development remains limited. This is largely due to systemic issues within Nepal, including weak administrative capacity and political instability. Therefore, it’s essential to consider Nepal’s economic dynamics and industrial structure more deeply in future aid projects to ensure sustainable progress.
Conclusion
Korea’s rise as a global economic power has greatly benefited Nepal and its people, not only improving livelihoods but also assisting Nepal’s development through significant investments and consistent financial and technical support. The recent inauguration of Nepal’s first automobile production, Hyundai Motor assembly plant in Nawalparasi highlights the elevated level of bilateral relations between Nepal and Korea. Furthermore, Nepal’s status as the first among the 16 EPS countries means that many Nepalese workers are securing job opportunities in Korea, with ongoing support for their resettlement and startup preparation upon return. This demonstrates the cordial nature of Nepal-Korea relations, which holds significance for the future of both nations. However, looking ahead, it is imperative for Nepal and Korea to address the challenges while exploring new avenues for cooperation. This includes enhancing coordination in labor migration policies, ensuring the efficiency and effectiveness of development aid, and promoting sustainable development strategies tailored to Nepal’s specific needs. By doing so, Nepal and Korea can continue to build upon their strong bilateral relations, fostering prosperity and mutual benefit for both nations and their people in the years to come.
Mira Rai is a Research Associate at the Nepal Institute for International Cooperation and Engagement (NIICE).
