South Korea’s trade and investment relationship with Saudi Arabia has grown tremendously, marked by close cooperation in a variety of areas.
Nak-Young OH consul general of Korea in Jeddah, said that South Korea and the Kingdom are opening a new chapter in business relations, expanding bilateral cooperation from the traditional economic field of trade and construction to the newly emerging sectors of medical and health care, ICT, defense, culture, research, education & vocational training.
Most recently, both countries have made significant strides in the field of pharmaceuticals by signing memoranda of understandings for the cooperation on the establishment of Saudi-Korea Pharmaceutical Complex in Sudair City in collaboration with Saudi Industrial Property Authority (MODON).
Four Korean companies are currently engaged to the joint-venture projects with Sudair Pharma Company (SPC).
Concerning energy sector, emphasis is placed on the efficient use of conventional energy and the development of renewable energy.
In addition, a number of sub-sectors have been under consideration, namely thermal insulation, water saving and recycling, public transportation, hospital information system (HIS), wastes treatment, food security and safety, eco-tourism.
For example, a Korean company is currently studying the feasibility on co-generation power plants with Plasma Arc gasification and combined cycle turbine system, which is basically environment-friendly and sustainable.
If once successfully implemented, these power plants can solve at a time the issues of costly treatment of wastes, profitable generation of energy and environmental protection.
The total trade volume between the two countries reached $46.5 billion in 2013 making Saudi Arabia the fourth largest trading partner to Korea and vice versa.
Korea imported mostly oil and petrochemical products equivalent to about $37.7 billion from the Kingdom and in return exported industrial and consumable goods of about $8.8 billion.
“The trade volume for the first half of 2014 shows a steady increase, amounting to the estimated $26.7 billion, where Saudi exports to Korea mounted at $22 billion and its imports about $4.7 billion.
In addition, the aggregate amount of Saudi investment in South Korea has reached more than $700 million, and Korean companies have invested more than $620 million in the Kingdom to date.
The ever-increasing volume of trade and investment reflects the dynamic business activities of mutual interests between the two countries,” Nak-Young Oh said.
“The Saudi government has long taken timely measures to reduce its dependence on oil revenues. It has striven for sustainable growth under the ambitious strategies, among others, industrial diversification & clustering, shift into knowledge-based economy and reforms of labor market.
This economic restructuring, together with recent changes in global oil markets, are viewed as great opportunities as well as daunting challenges for Korean companies.
Despite some limitations on free access to retail consumer markets, the considerable market shares of Korean ICT products and automobiles in the Kingdom suggest that those disadvantages could be overcome only with high-quality products with reasonable prices.” Nak-Young Oh said.
In the area of investment, though much progress has been made, there remain still some challenges identified such as low capacity of labor, local sentiment and preference for joint-venture investment and transfer of technology, technical barriers and practical discrimination in the process of settling disputes.
Korean companies like others are waiting for the substantial improvement of investment environment.
This story was originally reported in the Saudi Gazette on Nov. 4, 2014.