UAE emerges as second largest investment destination for South Korea

Abu Dhabi, May 7, 2012 (WAM) - The two-way trade between Korea and United Arab Emirates is picking up steam rapidly this year surpassing last year's figure of US$20 billion when UAE is gearing up to diversify its non-oil industrial sector, South Korean Minister of Strategy and Finance Bahk Jaewan said. He pledged to reinforce cooperation in areas where Korea's strength can be well harmonised with the UAE's policy direction which is also aimed at bolstering knowledge-based economy expressing hope that increased trade opportunities in service and other industries, not just resource-related industry. "The UAE is Korea's second largest investment destination in the Middle East. Korea's direct investment to the UAE stood at US$1.24 billion as of 2011", Jaewan told Emirates News Agency(WAM) in an interview. Following are the excerpts of the interview: Q 1: What have you been discussing with the UAE Minister of Economy? A: Korea's Ministry of Strategy and Finance and the UAE's Ministry of Economy have maintained bilateral cooperative ties since 2007 through the Joint Economic Committee Meeting. The Joint Committee is a high-level inter-governmental cooperative channel to discuss overall bilateral economic cooperation between the two nations. Through the Committee, we have expanded the areas of cooperation to high value-added industries, such as finance, education, healthcare and medical sectors, from conventional ones like trade, investment, energy and construction. At the Second Joint Committee Meeting held in 2010, we made a further progress, including our efforts to pursue the conclusion of an MOU for promoting cooperation in eight areas. Based on our mutual trust and strong willingness to work together, at the Third Joint Committee as well, we will discuss cooperative measures in a wider range of areas such as medical services, agriculture, environment and IT. Q2. What's the outlook for trade and investment with the UAE this year? A: The UAE is Korea's important trading partner. It is our largest importer among GCC countries as well as the second largest oil exporter. Bilateral trade which plummeted during the global financial crisis is showing a rapid recovery, surpassing US$20 billion last year. Even though majority of the trading volume still come from crude oil, we expect that such dependence will steadily decline. The UAE government is gearing up to diversify its industrial structure and build knowledge-based economy. And Korea plans to reinforce cooperation in areas where Korea's strength can be well harmonised with the UAE's policy direction. In that sense, I am confident that we will see increased trade opportunities in service and other industries, not just resource-related industry. Also, the UAE is our second largest investment destination in the Middle East. Korea's direct investment to the UAE stood at US$1.24 billion as of 2011. I hope to see more Korean companies advancing into the UAE market, and the Korean government as well will provide active support for them. I also look forward to the UAE's active investments in Korea. Q3. Beyond energy, how is South Korea looking to expand other forms of trade with the UAE? A: Korea and the UAE share similarities. We have open economies, and also grew into major economies in the world in a short period. And as our economies are complementary, there are various areas where we can work together in the future. For sustainable economic cooperation between the two nations, I think we should expand the areas of cooperation to added value-creating ones. Firstly, if the UAE's industrial diversification strategy and, Korea's manufacturing and IT industries meet together, I believe it will contribute to seeking future growth engines for both Korea and the UAE. Secondly, with UAE's human resources development policies and Korea's skilled workforce, we will be able to improve education infrastructure in the UAE and strengthen people-to-people networks between the two countries. Thirdly, by combining the UAE's policies to nurture medical industry with Korea's medical industry, we could enhance the quality of medical services in the UAE and promote medical tourism. There will be also other various opportunities of cooperation such as cooperation through the UAE's sovereign wealth fund, joint study of promising industries for investment and cultural exchange. Q4. How do you see the role of Korea EXIM Bank in financing trade and investment with the UAE and the rest of the GCC? A: The GCC countries, including the UAE, are projected to achieve even faster economic development on the back of high oil prices, and various infrastructure projects will be implemented down the road. Accordingly, I think many Korean companies with advanced technologies and price competitiveness will join in to win contracts for large scale projects by the GCC countries. KEXIM serves as a primary window to provide funding for those projects such as through export credits. And it provides Korean firms with financial advice and arrangement for winning overseas project deals. The Korean government, for its part, is continuously expanding the funding capacity such as by increasing the authorised capital of KEXIM. Also, in the process of implementing projects in the GCC countries in the future. I hope we could build networks between KEXIM and the GCC countries' wealth fund and policy financing institutions, and seek various cooperation measures, such as developing joint projects and co-financing, that will mutually benefit both countries. Q5. There are around US$ 40 billion of infrastructure projects in the pipeline in Abu Dhabi, some of which could open for tender in the second half of this year. What opportunities are there for South Korean firms in this pipeline? A: Rapidly increasing large scale project deals placed by Middle Eastern countries are being recognised in Korea as the second Middle Eastern boom. Traditionally, infrastructure is one of our important areas of cooperation in that, for the UAE, it improves foundation for economic activities, and for Korean construction companies, it provides opportunities to create profits. To help Korean companies advancing into overseas markets, the Korean government for its part is providing various supporting measures, such as fostering professional skilled workforce and providing tax credits and financial support. For this pipeline project in Abu Dhabi as well, I expect many Korean firms with strong construction capability will join in the bidding. Korean companies have been internationally recognised for their skills and diligence by winning various overseas contracts. And they have the strongest competitive edge in terms of price competitiveness, quality and the observance of due date. There will be other world renowned companies taking part in the bidding, but if a Korean company wins the deal, I expect it will add further momentum to the our bilateral cooperation in the construction sector. Q6. The UAE has long seen South Korea as a model for how it can nurture innovation and entrepreneurship. How do you assess the UAE's progress in developing its own knowledge economy? A: Both countries have many common grounds. We have a similar size of territory, respect tradition, and based upon vision and leadership, grew into major economies in the world in a short time. Both countries are also seeking sustainable growth. Korea is pursuing development through green growth, and the UAE is promoting the industrial diversification strategy. Korea highly appreciates the UAE's efforts in developing its own knowledge economy in preparation for the post-oil era. In this regard, the UAE's national development strategies, such as Abu Dhabi Economic Vision 2030, will play a crucial role in diversifying industrial structure and fostering human resources. I also see remarkable achievements made in the e-government sector such as providing information and service on government work by utilising IT technology. I look forward to the UAE's continued growth based upon its strong competitiveness and leadership. Q7: South Korea has reportedly been trying to drum up international support to fight speculation in crude oil and was lobbying G20 finance ministers to discuss this at a meeting in April. Is there any update on this? A: The G20 has shared recognition on oil as a major risk factor to the global economy, and discussed measures to address it. In particular, as for the reason for the large short-term price fluctuations that are witnessed frequently, it is the view of several countries, including Korea, that it largely came from not only the imbalance in supply and demand and geopolitical factors, but also speculative derivatives markets. To address it, Korea has constantly argued the need to provide proper regulative and supervising measures to improve transparency in derivatives markets. At the recent G20 Ministers and Central Governors Meeting in April, members shared recognition on the urgency of addressing the high oil prices. During the Meeting, oil producing countries reaffirmed their strong will for sufficient oil supply and we confirmed that G20 members were ready to take additional measures. Members also emphasised the importance of IOSCO's principles for the regulation and supervision of derivatives markets. As a large importer, Korea will continue its domestic and external efforts for stable oil markets. I think, at the G20 level, it will be important to closely monitor the implementation of what have been agreed so far to improve market transparency. In particular, I hope the assessment of the implementation of the principles for the regulation and supervision of derivative markets scheduled late this year can be conducted well. Q: What are the main agendas to be discussed at the Joint Committee Meeting this time? A: At the Third Joint Committee Meeting, we will discuss cooperative measures in nearly 15 areas, including not only the existing sectors of cooperation such as construction and energy, but also high value-added industries like agriculture, green growth, environment, healthcare, education and telecommunications. In particular, as we've expanded the scope of discussions this time given the comprehensive partnership between the two countries, new agendas will be added, including agriculture, broadcasting, telecommunications and government procurement. Since both countries have various areas of interest, from construction and energy to agriculture, environment and services industry, I expect constructive discussions will take place between the two sides on overall agendas. Through the Joint Committee Meeting, I hope the two countries will reaffirm a further developed bilateral partnership, and achieve successful outcomes. – Emirates News Agency, WAM