Mohammad's visit will open new vistas

Dubai: Tomorrow's state visit by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, to the Republic of Korea (South Korea), is expected to boost $15.82 billion (Dh58.05 billion) annual trade between the two countries, according to government and private sector officials.

Click here to see the export & import details (pdf)

UAE exports to South Korea grew 29.07 per cent last year to $12.93 billion, while the UAE's imports from South Korea increased by 5.97 per cent to $2.89 billion last year.

The UAE is Korea's fifth largest trading partner in terms of annual imports while the UAE ranks 27th on Korea's list of export destinations.

The current visit by Shaikh Mohammad follows the recent visit by South Korean leaders to the UAE over the last few months and reflects a strong desire by both countries to boost their fast growing economic relations.

Strong contingent

A strong contingent of business leaders is accompanying him in this tour, and a number of announcements are expected to be made.

Dubai's DP World operates a container terminal in Busan port, and its sister concern Economic Zones World has been in talks with the Korean authorities on investing in the Northeast Asian country to set up a free zone.

In the recent years, major South Korean builders have begun to penetrate the UAE's booming construction and real estate markets.

Samsung Corp is leading a consortium that is building Burj Dubai, the world's tallest tower, which, at 126 floors, has surpassed all other towers in terms of habitable floors.

"Bilateral foreign trade patterns show that the UAE relies heavily on South Korea's imports (it represents 90 per cent of bilateral foreign trade). This indicates that the UAE markets are well studied and penetrated by South Korea but not on the contrary," said a latest report by the Dubai Chamber of Commerce and Industry (DCCI).

Last year, DCCI received at least three South Korean trade delegations, but no delegations were sent to South Korea.

"Therefore, efforts must be channelled towards exploring more thoroughly South Korean markets through - for example - sending trade delegations in order to enhance exports and re-exports.

"In this context, the increase in exports and re-exports to South Korea could be very fruitful for the UAE given the huge market opportunities, identified in the foreign trade analysis section, in the South Korean market," the report said.

The industrial sector has been one of the main drivers of the South Korean economy (45 per cent of GDP in 2006) which is clearly reflected in the relevant share of its exports to the UAE (as well as the world) of electronics, vehicles and mechanical machinery and appliances.

"Interestingly, Dubai also re-exported these product categories to South Korea," the DCCI report says.

Nevertheless, re-export values are insignificant. Therefore, the main recommendation to be formulated here is not only to focus on enhancing trade in these products but also to take advantage of South Korea's competitive advantage in these industries and to foster cooperation and joint projects by inviting South Korean companies to invest in the UAE.

Furthermore, plastics are among South Korea's significant imports (19 per cent of its global imports) as they are raw materials for manufacturing. Likewise, plastics are a major UAE export.

Hence, it is recommended that foreign direct investment opportunities be sought in South Korean plastics ventures.

Historically, FDI in Korea has been channelled into either manufacturing or services. The most popular ventures for foreign firms are in the electronics, transport equipment and ICT categories.