Arnold, who has made only two of seven cuts this season in his first full season on the Web.Com Tour, followed up his brilliant opening round of 65 with a second round of 71 to be six shots from the leader.
Robert Allenby and Matthew Goggin failed to make the cut.
The event is being led by Korean Kyoung Hoon Lee, a two time winner of the Korea Open and a multiple winner on the Japan Tour.
Want video tips delivered straight to your inbox? Subscribe to iseekgolf.com newsletters.