Promising partnership: OBG talks to Yoon Sang-Jick, Korean Minister of Trade, Industry and Energy

To what extent will relationships with GCC member states play a significant role in South Korea’s future energy security?

YOON: It has been a top national priority for South Korea to secure a stable supply of energy resources, as it is the fifth-largest oil importer and eighth-largest oil consumer in the world. As key energy allies and valuable partners, GCC member states have greatly contributed to South Korea's remarkable economic development – the so-called Miracle on the Han River – and to its national energy security. GCC member states account for approximately 70% of the country’s total oil imports.

The UAE is currently the only GCC country where South Korean companies are participating in oil and gas development projects in which all of the oil produced is imported by South Korea. I strongly support such mutually beneficial business partnerships, and I hope that South Korea can expand them to other GCC countries in the future.

What is being done to promote greater investment in South Korea by regional stakeholders?

YOON: South Korea has a special agency to promote foreign investment, the Korea Trade-Investment Promotion Agency (KOTRA), under the Ministry of Trade, Industry and Energy (MOTIE). It offers various types of support to foreign investors such as tax breaks and land and cash incentives. Established in 1967, KOTRA also launched Invest Korea in 2003, a unit exclusively devoted to supporting foreign businesses.

In October 2014 MOTIE revised the enforcement ordinance of the Foreign Investment Promotion Act to support the country’s new plans to attract high value-added foreign investment such as the regional headquarters and research and development (R&D) centres of multinational corporations. President Park Geun-hye announced these plans during a roundtable meeting with major foreign companies in South Korea in January 2014, and they include various incentives such as a permanent flat income tax rate of 17% for foreign employees working at regional headquarters and an income tax reduction of 50% for foreign engineers working at R&D centres.

In line with this, South Korea dispatched an investment delegation to the US in April 2014 and to Europe in July 2014 to invite global corporations such as Siemens, BASF and Merck to establish their regional headquarters in South Korea, one of Asia’s most dynamic and innovative economies.

To create a better environment for foreign investors, South Korea is always striving to improve its regulations on foreign investment by, for example, simplifying the reporting procedures and combining or removing duplicate reporting systems. Korea will continue in its efforts to become a prime destination for foreign investors and businesses by providing greater incentives and working to make the country’s legislation more business friendly.

Where do the negotiations for the South KoreaGCC free trade agreement (FTA) stand, and how will the FTA contribute to stronger economic ties?

YOON: The first round of negotiations for the South Korea-GCC FTA were held in July 2008, followed by two more rounds of discussions in March and July 2009. During these negotiations the two sides made significant progress in areas such as government procurement and economic cooperation.

Unfortunately, the South Korea-GCC FTA was temporarily suspended after the GCC announced a moratorium on all such agreements in early 2010. If the GCC, however, lifts the moratorium in the future, it could open up the possibility of resuming the stalled bilateral FTA negotiations.

The FTA would help South Korea secure a stable supply of energy and resources. It would also provide greater opportunities for South Korea’s experienced and competitive construction companies to enter the GCC’s large and promising plant market.