President Park Geun-hye’s trip to the Middle East next week is expected to bring fresh business opportunities for Korean builders and have a positive economic impact on the South Korean economy, which is facing slowing growth rates and falling employment, experts and officials said Thursday.

Park is set to embark on her nine-day trip on Sunday. She plans to visit Kuwait, Saudi Arabia, the United Arab Emirates and Qatar, respectively, on her first overseas trip of the year.

“The trips are meant to expand the Park Geun-hye government’s diplomatic landscape out to the Middle East region and to strengthen ties with Gulf nations this year, which marks the 50th anniversary of (South Korean builders’) entry to foreign markets,” said Ju Chul-ki, senior presidential secretary for foreign affairs.
 

The South Korean government will also seek to diversify business portfolios with Gulf nations to prepare for the post-oil era, shifting their focus from heavy industries of energy and plants to high-value-added industries such as education, medical services and infrastructure improvement.

“We will link their policies aimed at diversifying industry (portfolios) with our three-year economic plans,” Ju said.

Park plans to introduce her vision of creative economy aimed at nurturing creative ideas from across society, and assimilating them with ICT, science and technology, and other industries.

Park’s Middle East trip was previously scheduled for last year, but was put on hold after she came under fierce public scrutiny over the government’s bungled response to the sinking of a ferry that killed 300 in April. Park visited the UAE on a two-day trip instead, on the request of the Middle Eastern country. She attended a ceremony to mark the installation of the first nuclear reactor developed and exported by Korean firms to the country.

“It is a must for South Korean presidents to visit (traditional partners) in the Middle East to maintain strategic and economic ties on a regular basis rather than exploring ways to break into new markets in the region,” said In Nam-sik, an associate professor of European and African studies at the Institute of Foreign Affairs and National Security, referring to the South Korean economy’s heavy economic dependence on the oil-rich nations.

The four nations are South Korea’s major destinations for construction and plant exports as well as major providers of fossil fuel energy. Trade volume between South Korea and the four countries accounts for 74 percent of total trade in the Middle East region, according to the presidential office.

Earlier this week, Park urged officials to expand economic cooperation with the region, stressing that massive construction and infrastructure projects in oil-rich nations could become a new growth engine for South Korea’s economy.

The president said she expected Korean builders to seize opportunities to initiate “the second Middle East boom.”

In the 1970s, South Korea sent tens of thousands of engineers and workers to the Middle East during a construction boom in the region.

This year marks the 50th year since South Korean builders entered foreign markets, and the 40th year since they set foot in the Middle East.

Her tour of the four nations comes at a critical time, with Korean builders suffering from declining orders from the Middle East.

With international crude prices falling, oil-rich Gulf nations are expected to cut the number of construction orders this year as profits from oil exports deteriorate.

According to a study by Hyundai Research Institute, Korean builders are forecast to lose $6.8 billion worth of construction orders from foreign countries a year if the price of Dubai crude oil drops 10 percent. The study, quoting a recent forecast by Cambridge Energy Research Associate, said the price of Dubai crude could slide to $64 per barrel this year, a sharp drop from an average price of $100 recorded last year. This implies that Korean builders could lose $24.8 billion or one-third of the total amount of orders they won last year, HRI said.

Construction orders from the Middle East totaled 47.5 percent last year.

On the first leg of her four-nation trip, Park will visit Kuwait for three days and hold a summit with the emir of Kuwait, Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah. The leaders are set to discuss ways to increase bilateral cooperation in energy, construction, railroad, medical and information technology.

Park is the first South Korean president to visit the Western-allied Gulf nation in eight years.

During her stay, the two sides are also set to announce plans to ease entry of South Koreans to Kuwait, Ju told reporters. Park will also seek Kuwait’s support for peace on the Korean Peninsula and discuss security issues in the Middle East region, he added.

Park will then fly to Saudi Arabia on March 4 for a two-day visit to meet newly crowned King Salman bin Abdulaziz Al Saud. The two previously met for a summit in Seoul in November.

The leaders are to seek expansion of bilateral cooperation in energy, construction, health and communication technology as well as security issues. “Saudi Arabia is one of our core allies that has no diplomatic ties established with North Korea,” said Ju. “We will reconfirm Saudi’s consistent support for South Korea and our policies toward North Korea.”

Park also plans to meet Alwaleed Bin Talal Bin Abdulaziz Al Saud, chairman of Kingdom Holding Company of Saudi Arabia, popularly known as the Warren Buffet of the Middle East.

At her third destination, the UAE, Park plans to meet with Mohammed bin Zayed bin Al Nahyan, prince crown of Abu Dhabi, before heading to Qatar on March 6. It will be their third summit since Park entered office in early 2013.

“The UAE has been our strategic partner and we will seek to diversify cooperation in (the) medical, food (and) culture (industries),” the senior presidential secretary said. The Korean government plans to intensify medical cooperation with the UAE to improve the quality of medical service there.

Park also plans to meet Qatar’s Emir Sheikh Tamim Bin Hamad Al Thani in return for the Qatari leader’s visit to South Korea in November. Park’s visit is expected to secure more business opportunities for Korean firms in Qatar, the host of the 2022 World Cup.

By Cho Chung-un (christory@heraldcorp.com)