ABU DHABI – UAE’s investors can build a mega business district in South Korea’s capital Seoul, besides buying shares and equities, and bonds. They can also set up joint ventures in technology, Research & Development, manufacturing and financial services, officials said.
The economic planners at the Korea Trade Investment Promotion Agency in Seoul think that the UAE’s money can create hundreds of ‘wonder projects’ in both the countries and elsewhere, using their technological prowess.
South Korea, which invests more than five per cent of the $1 trillion gross domestic product into research and development annually, is proud of technology and highly skilled human resources. They believe that UAE’s financing can help translate their hi-tech research into finished goods for the global consumers.
These views were expressed by South Korean officials unofficially at the Foreign Investment Week, held at Seoul recently. Organised by Korea Trade Investment Promotion Agency, or KOTRA, the seminar attracted investors and investment advisors from around the world.
Sharing the thinking in the agency, an official said, “Abu Dhabi has an ambitious economic transformation plan aiming at creating new economic sectors to diversify its growth by 2030.”
The UAE’s investors can benefit from Korean business intelligence on Asia, and vice versa South Koreans could make use of the UAE’s influence in the MENA region.
South Korean industrial and technology-rich companies are in a position to contribute their expertise and knowledge to realise Abu Dhabi’s industrial ambitions in a big way by setting up joint venture projects in the Khalifa Industrial Zone Abu Dhabi, or Kizad.
An official of KOTRA, which was behind South Korea’s great strides of attracting $17 billion in foreign direct investments last year, told Khaleej Times, the UAE’s investors can enter into joint ventures with the thousands of South Korea’s SMEs, which have technology and expertise in different industries in their bid to expand their product base in and outside of the Korean Peninsula.
South Korea’s industrial sector is fast catching up the biggest manufacturing power house in the world that’s why it needs capital.
Already it ranks number one in ship-building with 44.4 per cent share in the world market; it’s the third in semi-conductor making with 11.2 per cent of the global share; its fourth in electronics, as in one in two of the LCDs, and one in four mobile phone sets under use in the world are manufactured there.
Capital-hungry, South Korea also wants investments to set up hi-tech industries in almost all sectors, particularly to manufacture PV solar panels, organic LEDs, apart from aluminum smelters, cables and wires, auto parts and others.
One of the most exciting areas of investment in the fast growing economy is the real estate development, where several of the UAE companies with global exposure can make money.
The South Korean economy, which was least affected by the sovereign debt crisis in the Europe and US, is also welcoming portfolio investors from the UAE to invest into its stock exchange, which is really doing well on the back of strong industrial economy. The bond market and private equity are also quite attractive for the UAE investors.
While the industrial economies in the West are threatened by the downgrades in their credit worthiness, Korea’s credit rating forecast has been upgraded.
Korea ranked 8th out of 183 countries in the World Bank’s 2011 Doing Business report, up 8 levels from last year. And, according to the recent OECD report on the restrictiveness of FDI regulations, Korea has jumped from ranking 41st out of 42 countries in 1997 to 10th in 2010. South Korea is seeking foreign investments into its high growth economic sectors of renewable energy, service industry, research and development and logistics.
Other areas in which, Asia’s third biggest economy is attracting investments include chemical and electronic material industries.
Incentives to attract foreign investors in FEZs include: corporate tax, income tax break for a period of 5-7 years (100 per cent in the first 3-5 years and then 50 per cent in the next two years); acquisition and registration tax 100 per cent for the first 15 years; property tax 100 per cent for the first 10 years, 50 per cent for the next three years; rent/lease reduction is also providing depends on the investment amount.
Among exciting investment opportunities for the UAE investors include a new business district in the heart of Seoul is being developed by a group of 30 companies. Along with several other mega infrastructure projects including the development of six economic free zones and mixed use real estate projects.
Investment is also sought for Yongsan International Business District, a project to be completed in 2016, which will comprise 67 multi-storied buildings and big civic structures including a landmark, the tallest 100-floors. The $30 billion mega project’s gross floor area is as huge as 3.46 million square metres. The mega development will include office and retail spaces, luxury apartments, hotels, and cultural facilities. It will be the world’s brightest LED skyline, as all the buildings will be covered with LED, which will light-up in evenings.
Foreign direct investment in South Korea gained 4.6 per cent last year on largely increased investment from advanced countries. South Korea attracted $13.67 billion in FDI last year, compared with $13.07 billion in 2010, according to the Ministry of Knowledge Economy.
“Foreign investment in South Korea is beginning to grow and the amount reached more than $13 billion in 2011 for the second consecutive year since 2010, while the average amount since 2000 stayed below $12 billion,” it said in a latest report.
“This appears to reflect the growing confidence of the international community in the South Korean economy.”
Direct investment from advanced countries surged 33.6 per cent on-year to about $9.69 billion with FDI from EU nations jumping 57.4 per cent and the United States 20.2 per cent.
Investment from China increased 21.6 per cent to $1.94 billion over the cited period but investment from the Middle East plunged 46.2 per cent to $92 million as investor sentiment remains low amid continued political unrest in the region.
The FDI in South Korea’s service sector gained 15.4 per cent from a year earlier to $7.27 billion while foreign investment in the country’s manufacturing industry dropped 15.1 per cent to $5.65 billion.
The ministry said FDI in 2012 will likely remain at around $13 billion. The UAE-Korea economic partnership is strengthening every passing day, as the leadership of the both nations values fostering these relations. The warm relations have also resulted in the closer cooperation in developing economic projects for mutual benefits.
Abu Dhabi’s confidence in South Korea is also reflected from the award of the $20 billion project to build 1600 megawatt Nuclear Plants deal, which has deepened the relations since then. This is not it, in the last 18-months Korea’s engineering and construction companies have snatched $25 billion worth oil and gas development projects in Abu Dhabi.
Sky is the limit for Korea’s companies in the UAE.
haseeb@khaleejtimes.com
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