Korea, Saudi Arabia deepen economic cooperation
Saudi Crown Prince Mohammed bin Salman's visit to South Korea is expected to deepen economic cooperation between the two countries. His trip here, the first since June 2019, comes as Seoul and Riyadh mark the 60th anniversary of diplomatic ties this year.
On Thursday, Korean business leaders met Crown Prince Mohammed, prime minister and de facto ruler of the Middle Eastern country, to discuss business collaboration. Among the business leaders he met were Samsung Electronics Executive Chairman Lee Jae-yong, SK Group Chairman Chey Tae-won and Hyundai Motor Group Chairman Chung Euisun. They were busy signing memorandums of understanding (MOUs) and business deals with the government, institutions and corporations of the kingdom.
Both countries can open a new chapter in their relations, particularly for the economic and business sectors. The Saudi side put business cooperation projects worth 100 trillion won on the table this time, a tenfold increase from a package of 10 trillion won the Arab country offered when the crown prince visited Seoul in 2019. The surge reflects the elevated status of the crown prince nicknamed "Mr. Everything," who became Saudi prime minister in September.
More importantly, Saudi Arabia has become more powerful economically since the Russian invasion of Ukraine. The country has become richer by taking advantage of soaring oil prices. The crown prince has been going all out to implement his Vision 2030 initiative to reshape the country's economy. Its top priority is to reduce the country's dependence on oil and find new growth engines.
South Korea's cooperation is pivotal to achieving the initiative. Korea is one of the five major partner countries chosen by Saudi Arabia for the Vision 2030, which includes the Neom city project worth $500 billion won. This mega-project offers huge opportunities for Korean businesses.
The consortium of Samsung C&T Corp. and Hyundai Engineering & Construction already won a contract for the drill and tunneling work of the project. The contract was seen as the world's largest transportation and utility infrastructure projects. This shows how much business potential the Neom project carries. The project is to build a construct an automated, sustainable city in the northwestern Saudi province of Tauk that will be run by robots and powered by solar energy. Another consortium composed of five domestic firms such as PSOCO and KEPCO is to build a green hydrogen production plant in the city. In addition, Hyundai-Rotem signed an MOU on the Neom railway project with the Saudi investment ministry. Lotte Fine Chemical also struck an agreement on chemical projects with the ministry.
South Korea has great expectations about a "second Middle East boom" after the first one in the 1970s. Such expectations can be materialized further on the occasion of bin Salman's visit here. The business opportunities originating from the kingdom are no doubt a boon for the Korean economy which is reeling from runaway inflation, higher interest rates and the losing value of the Korean won against the U.S. dollar.
The Yoon Suk-yeol administration should work together with local businesses to seize the rare opportunities by expanding cooperation with Saudi Arabia in diverse fields such as climate change, digital and bio technologies, renewable energy, nuclear power generation, infrastructure and construction. Such an expansion could also help the country to reduce its excessive reliance on China for economic growth.