28/07/2009
South Korean investments are set to grow in the Kingdom with many Korean companies increasingly interested in the Saudi market. This was the view expressed by Mr. Hong Jong-ki, South Korean Ambassador to the Kingdom, in an interview with the Saudi Commerce and Economic Review during his visit to Asharqia Chamber recently.Mr. Hong met with Chamber President, Mr. Abdulrahman Rashed Al Rashed. They discussed ways and means to further improve trade relations between the two countries. Mr.Honggave an overview of a couple of epoch-making new investment decisions made by Korean firms last month. On July 11, a consortium led by Korea Electric Power Corp (KEPCO)signed a contract with Saudi Electricity Company (SEC) to build a 1,200 megawatt power plant in Rabigh in which KEPCO is supposed to fund around $ 2 billion. On the following day, Hanwha Chemical of Korea and Saudi International Petrochemical Company (Sipchem) agreed to form a joint venture to build a high-tech petrochemical plant in Jubail at a cost of $ 9 billion for which Hanwha's share amounts to 25%.There are bright prospects for more Korean investmentsin the areas where the Kingdom has competitive edge such as petrochemicals and power generation, and eventually over the timein the automobile and shipbuilding sectors, in which Korea has world-class technology and expertise, observed the Korean Ambassador.Korean firms have made successful investments in Saudi Arabia, noted Mr. Hong citing an example of a recent significant Korean investment in the manufacturing of air conditioning units through the new joint venture, LG-Shaker Co. Ltd. The venture, set up in 2008 between LG Electronics and its Saudi partner, H.G Ibrahim Shaker has already captured over 60 percent of the local market in the split air conditioning segment. "It was asample case forsuccessful Saudi-Korean joint ventures in recent times", he said.LG-Shaker Co. Ltd. is located at Al Taweer Industrial City, south of 2nd Industrial City in Riyadh. The new LG-Shaker factory was built at a cost of SR131 million with a production capacity of 250,000 units per year and production will reach 500,000 units per year within the next five years.
Korean firms have noticeable investments in Saudi Arabia. Currently, the number of Saudi-Korean joint ventures or 100 percent Korean-owned companies reached over 83. Korean firms have been mainly engaged in the Kingdom's construction and manufacturing industries.
While talking about trade exchanges between Saudi Arabia and South Korea, Mr.Hong pointed out that the two-way trade rose significantly to around SR 146.3 billion in 2008. During the period, Saudi imports from South Korea amounted to over SR41.3 billion, while its exports to Korea accounted for SR105.0 billion. Saudi Arabia mainly exports crude oil to South Korea, he said.
Saudi-South Korean Trade 1998-2008
(SR Billion)
Year
Saudi Imports from south Korea
Saudi Exports to South Korea
1998
3.9
13.9
1999
3.8
20.4
2000
3.9
31.3
2001
3.8
24.6
2002
4.0
25.9
2003
5.9
31.8
2004
6.7
40.4
2005
8.1
57.4
2006
9.9
72.6
2007
15.2
73.9
2008
41.3*
105.0*
*Trade figures for 2008 have been provided by South Korean Embassy in the Kingdom
Source: South Korean Embassy in the Kingdom and Central Department of Statistics & Information (Foreign Trade), Ministry of Economy and Planning, KSA.
South Korean major exports to the Saudi market included automobiles, iron & steel products, blankets, air conditioners, and industrial machinery. Saudi yearly average imports of Korean vehicles have reached over SR3.7 billion and machinery including construction and heating equipment jumped to around SR1.3 billion.
Saudi-South Korean Trade: 2007-'08
Products
2006
2007
Fabrics containing polyester
156.6
155.8
Blankets of synthetic fibers
147.6
176.6
Flattened cast iron
120.9
149.4
H sections, 80mm or more high
280.3
