The Republic of Korea and Kazakhstan: a New Co-operation Model
Mr TAE Suk Won, Ambassador of the Republic of Korea to Kazakhstan, answers the questions by our magazine
What are strategic economic interests of the Republic of Korea to Kazakhstan and Central Asia?
Based on the 1995 “Declaration of General Principles for Relations and Cooperation” and reaffirmed by 2003 Joint Statement between the Presidents of our two countries, Korea and Kazakhstan are taking solid cooperative ties to a higher level in a range of fields including energy and mineral resources as well as science and technology, fully utilizing the potential for economic complementarities.
In this regard, the first meeting of the Korea-Kazakhstan Joint Committee for Energy and Mineral Resources Cooperation was held on March 12, 2004 in Astana, with signing a MOU on the joint development of Caspian oil projects between the Korea National Oil Corporation and KazMunayGas as well as an Agreement on joint exploration in the South East Kazakhstan between the Korea Resources Corporation and the Kazakhstan Committee on Geology and Subsoil Protection.
In addition, other joint researches and cooperation are on its way in the fields of cutting-edge science and technology including next-generation information technology, peaceful use of nuclear energy as well as production of new materials.
With a view to becoming one of the economic hubs in Northeast Asia, Korea is well aware of the strategic, economic importance of Central Asia and has endeavored to increase bilateral trades with other Central Asian countries as well. This trend of closer cooperation between Korea and Central Asia will be certainly spearheaded by the one between our two countries.
Could you tell about trade economic relations between our countries?
Korea and Kazakhstan have progressively developed bilateral relations since the establishment of diplomatic relationship in January 1992, and the 2003 Summit Meeting of the Presidents of the two countries rendered an excellent opportunity to raise our bilateral economic and trade cooperation to a higher level.
The economic relations between Korea and Kazakhstan continue to further strengthen as evidenced by the growth in trade volume, which increased 87% last year compared to year 2002, with 113.6% increase in Kazakhstan’s exports to Korea and 72% increase in Korea’s to Kazakhstan. In particular, it is encouraging to witness the volumes of our two countries’ respective export to each other increase in a balanced, mutually beneficial way. I believe that given the complementary nature of our two countries’ industrial structure, the current trend of our bilateral trade will certainly continue in the future.
In view of the increasing interests in Korea about Kazakhstan, improvements in taxation, customs-clearance, administrative regulations, etc in Kazakhstan will help attracting more investments from Korea and further promote overall bilateral trade between our two countries.
How do you evaluate the transit potential of Kazakhstan for transportation of products from Northeastern Asia to Europe?
Located at a strategically important region that connects Asia and Europe, Kazakhstan has a good transit potential for transportation of products from Northeaster Asia to Europe.
In particular, Kazakhstan’s continued investment to upgrade its transportation infrastructure such as roads, railways and airports will certainly help Kazakhstan to emerge as a major transit country in Central Asia.
Moreover, Kazakhstan’s active involvement in such projects as the Asian Land Transport Infrastructure Development, the Special Program for the Economies of Central Asia, etc., which are designed to increase the transit capacity of Eurasian countries and to boost mutual trade, should help its efforts to realize the Great Silk Road.
Korea, located at an entry point of the Asian Continent from the Pacific Ocean, is highly interested in promoting the Trans Korea Railway with a view to connecting it to the Trans Chinese Railway (TCR) and the Trans Siberian Railway (TSR). In this regard, there are great potentials of cooperation between our two countries in land transportation between Asia and Europe and beyond.
Your country is a major foreign investor of the Kazakhstan telecommunication sector. Could you tell about the biggest projects realized in our country?
In October 2003, LG Electronics, jointly with Kazakh Telecom, completed the first phase of the modernization project of the telecommunication network of the Almaty Oblast. For the project, the Korean side provided $14 million in EDCF loan.
Following the completion of the first phase of the project, 74,500 telephone lines are now connected using an electronic switching system (TDX).
Such Korean companies as Samsung Electronics and LG Electronics are also actively involved in Kazakhstan telecommunication market, providing quality cellular phones and other telecommunication devices to the Kazakh consumers.
What are other sectors of the Kazakhstan economy, which are the most attractive for the Korean capital nowadays?
Thanks to President Nazarvayev’s successful visit to Korea in November 2003, there are increasing numbers of Korean companies, which are showing interests in doing businesses in Kazakhstan. Considering the substantial potential for trade cooperation between the two countries and the respective economic strengths of the two countries, Korean companies would be most interested in participating in the following fields of the Kazakhstan economy: Oil and gas development in Caspian Sea; Mineral resources development in the South East Kazakhstan; Consumer electronics including the latest home-networking system, cellular phones, etc.; Information technologies such as establishment of e-Government, e-Trade, e-Banking System, etc.; Computer products such as semi-conductors, telecommunication devices, etc; Construction projects in Astana and other major cities, plant construction and construction material; Consumer and commercial vehicles and parts; Small and medium business cooperation.
The Republic of Korea is one of leading exporters of high technology production in the world. What state measures and mechanisms are used by your country for achievement of such high results?
Korea has made steady efforts to nurture a high technology economy since 1990s. The Korean Government has carried out consistent policies to facilitate the economic transformation into a new economic paradigm of the knowledge-based economy. Moreover, the spirit of innovative entrepreneurship of the Korean people, coupled with the forward-looking vision of the Government leadership, has helped Korea to become a global Information Technology leader.
The Korean Government provides such tax incentives as exemption of minimum taxes for R&D expenses of small and medium-size enterprises (SMEs) for the next two years, reduction of special excise tax on plasma display panel (PDP) and projection television sets, etc as well as accelerated depreciation for business facilities purchased till first half of 2004, shortening the period for by up to 50% of the normal period.
To help revitalize SMEs and Venture Start-ups, tax rate was lowered to encourage SMEs with innovative technologies to expand facility investment, and the SME support system was also upgraded by mapping out a comprehensive plan for promoting venture start-ups.
To improve foreign investment environment, income taxes have been reduced for foreign executives and staff; regulation involving free trade zones consolidated into a single set of regulations; and procedures governing foreign exchange transactions between foreign-invested companies of which investment amount exceeds $10 million and their overseas headquarters simplified.
Considering the successful experience accumulated by your country in innovations, what, to your opinion, are prospects of cooperation between our countries in this field?
There are significant potential of cooperation in the field of innovation, science and high technology between our two countries. This was again reaffirmed during the 2003 Korea-Kazakhstan Summit Meeting, calling for joint researches and cooperation in information technology, science and technology including peaceful use of nuclear energy as well as production of new materials.
In the field of information technology and telecommunication, our two countries are exploring various options such as sharing Korea’s e-Government, e-Banking System experience and other cutting-edge information technology. Korea’s world-class telecommunication technology including wireless telecommunication technology will be able to contribute to upgrading Kazakhstan’s telecommunication networks. Furthermore, attractive investment package from the Kazakhstan side will help attract Korean technologies, capitals and experts to the IT techno-parks in Kazakhstan, paving the way for closer cooperation and mutual benefits.
Our two countries are also working closely together in cooperation in the nuclear technology. In this regard, an agreement for cooperation in the peaceful use of nuclear energy is currently being prepared, which is expected to be another positive step to promote scientific and technological innovation and cooperation between our two countries.
Kazakhstan has successfully implemented the Strategy of Industrial Innovation Development since its inception, whose aims include promoting scientific and highly technological export oriented businesses.
Korea is highly interested in providing positive contribution and becoming an important partner in further enhancing innovation efforts of Kazakhstan. Korea, once known as one of the world’s poorest countries, has itself undertaken economic development based on export-oriented economic development program as well as innovations in technology and become the world’s 12th largest economy.
I sincerely hope that Korea will have an opportunity to closely work together with Kazakhstan, sharing its experiences in technical, innovation process and positively contributing to its economic development.
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