Caspian Energy Journal Caspian European Club
Tuesday, 20 December 2016 19:00

Azerbaijan government should provide more incentives to the Korean companies – Ambassador of South Korea Kim Chang-gyu Featured

GDP has grown 450 times over the period up to 2014


Caspian Energy (CE): Mr. Ambassador, has this year been successful for Korea in the international arena and bilateral relations?

Ambassador Extraordinary and Plenipotentiary of the Republic of Korea to the Republic of Azerbaijan Kim Chang-gyu: Of course, the Republic of Korea has been successful in its bilateral and multilateral diplomacy. It has succeeded in introducing tougher sanctions against North Korea whenever it violated international law by conducting a series of nuclear tests and missile provocations. The sanctions were possible due to the Korean government’s strenuous efforts to boost up a close cooperation of the international community. The Republic of Korea has widened and deepened  its global FTA network by concluding FTAs with many major trade partners such as the U.S., the EU, and China. With these efforts, it could foster our economy to grow on a sustainable basis.

This year the Republic of Korea, often referred to as a success model for economic development, did its best to contribute to implementing or concluding historic milestone conventions such as the 2030 Agenda for Sustainable Development and the Paris Agreement on Climate Change. It endeavored to share its experiences and technologies for implementing the development goals with many countries and, as the host country of the Green Climate Fund (GCF), actively cooperated with the international community in the efforts to tackle climate change.

The Republic of Korea has sought an active bilateral cooperation with all countries in every diplomatic area, economic, cultural and consular areas in particular so as to achieve co-prosperity of all human beings by deepening mutual understanding  and enhancing  peace and stability.


CE: The Korean economic miracle went down in global history together with other countries such as Singapore, Japan. What was Korea’s secret? Do you think it is possible to apply the Korean experience in conditions of Azerbaijan, including other countries of the region as well?

Kim Chang-gyu: Of course, some common requirements needed for economic development such as a wise and efficient leadership and well-educated human resources could be applied to other countries including Azerbaijan. Let me say shortly about the Korean experience of economic development. The GDP per capita of Korea stood at 62 US$ in 1962 when it started an industrialization policy. The GDP has grown 450 times to 27,633 US$ over the period up to 2014. It is my firm conviction that the economic miracle was possible due to the wise and strong leadership of the Korean government and the hardworking and industrious people. The government led the country with a series of systematic and efficient economic development strategies and the well-educated people realized their potential for economic growth with their toil and tears.


CE: What have been the results of the session of the intergovernmental commission between the two countries? Which new projects have been initiated? What will be the volume of investments?

Kim Chang-gyu: The first IGC meeting was held in Seoul in June this year. The meeting was a fruitful opportunity for us to assess the achievements made by our two peoples and come up with new ways to promote future cooperation. I expect the commission will play a major role to promote the economic cooperation between our two countries in the future.

When it comes to the bilateral economic cooperation, the most important thing is to implement agreements reached at the Commission. I mean actions are more important than words.  In this regard, I set up strategic goals in five priority areas: medical service, ICT, petrochemistry, transportation and tourism. In consideration of high quality human resources of Azerbaijan, our cooperation in ITC and medical service is most likely to be successful. Recently I visited ASAN center and was impressed by the technological advancement of the Azeri e-service industry. I am planning to invite many Korean ICT engineers and professionals to Azerbaijan to assist local business incubators and start-ups and teach at ICT departments of major universities here. Korean-model polyclinic complex looks to be also highly prospective to be introduced, because it could go well with skilled medical human resources in Azerbaijan. With a successful establishment of highly advanced polyclinic complex, Baku will be a medical hub in Caucasus region, thus enhancing medical welfare of the Azeri people and furthermore creating a higher value-added industry. When we join our industrial and service advantages with each other, it is sure to bring about a great benefit to both of our peoples.


All countries on the Silk Way must step up their cooperation


CE: What is your position towards the engagement in the Silk Way and North-South, where Azerbaijan stands as one of the major transportation hubs?

Kim Chang-gyu: Since the ocean transportation started prevailing over ground one from the 15th century, the role of the Silk Way has diminished in global transportation. Korea, situated at the Eastern end of the Silk Way, was very active in trading through the way by the 15th century. There are found even now many old products imported through the Silk Way. With the revival of the Way, it is highly expected that the trade activities of the Silk Way countries will be activated. Azerbaijan, a country at the crossroad of North-South and West-East corridors, is sure to be a biggest beneficiary as a major transportation hub of the Eurasian continent.


CE: What conditions should be created so that distant countries-exporters could benefit from the use of these corridors?

Kim Chang-gyu: We, all countries on the Silk Way, must step up our cooperation to harmonize transportation and customs systems different from each other so as to facilitate the use of the Way. Also, their diplomatic efforts are needed to enhance mutual understanding and cooperation among them. Enhanced mutual understanding will bring about an increase of trade and investments, thus leading to co-prosperity and peace and security on the Eurasian continent.

I think most important element for an individual country to maximize its benefit from the use of the transport network is to enhance the competitiveness of its own products. In this context, I wish to say that the Azeri government’s decision to diversify their industry was right and timely. Such efforts of the Azeri government will ensure a bigger benefit from the Silk Way.


CE: South Korea and Azerbaijan agreed to cooperate in the field of e-government. Which steps have been taken? What measures are planned to be undertaken?

Kim Chang-gyu: A successful cooperation is possible only when a proper environment for cooperation is established. So, it is most important for diplomatic practitioners to look into environment in advance before they start a project. When we consider the highly cultivated human resources of both of our countries,   cooperation in ICT area envisages a great success. With this insight, I invited Interior Minister from Korea to Baku to discuss cooperation in ICT area. He concluded a MOU on cooperation in ICT area with ASAN, in which our two sides agreed to exchange experiences and technologies. I also invited some ICT professionals from Korea to assist the business incubators and other ICT businesses. Our cooperation will lead to a great development in e-government industry of our two countries.


CE: Mr. Ambassador, Azerbaijan has been committed to implementing economic reforms in the last two years. What benefits do you see in these processes for the South Korean companies? 

Kim Chang-gyu: I have witnessed many reforms undertaken by the Azerbaijan government, especially in  taxation and other administrative services. I am sure such reforms will produce positive outcomes in the future. I am also closely watching the progress of industrial diversification policy of the Azeri government. Diversification of industries is very important for a nation’s building a competitive economy. As you know, Korea is competitive in many industrial areas. We are strong in petrochemistry, manufacture, high technology, ITC, medical service in particular. Korea is ready to share its experiences and technologies with Azerbaijan. 

When it comes to our bilateral economic cooperation, my first consideration was over the rich human resources of Azerbaijan. There are many high-skilled specialists working in your country who are capable to apply newly introduced high technologies for their sake. I invited three ICT professionals from Korea. They are seasoned professionals who had worked for many foreign countries. Here in Azerbaijan they are working in the ADA, helping business incubators and contents developments.  I believe their activities will produce great success.  

As far as medical service is concerned, I am planning to invite several Korean doctors here to teach at the medical department of  universities. They will train your medical students in Azerbaijan and also share their experience with  Azerbaijani colleagues.


CE: Mr. Ambassador, such globally known Korean brands as Hyundai, Kia, Samsung are popular in Azerbaijan. Do they plan to set up production here?

Kim Chang-gyu: As you know, many Korean brands are doing business in Azerbaijan. They have their offices here, but still have not opened factories in Azerbaijan. Azeri car market and mobile phones market are not big enough for Samsung or Hyundai to set up their factories. But when we consider the entire Caucasian market including Georgia, southern Russia, western Central Asia, I think it might be possible to open large production facilities here. As the efforts of the Azeri government to revitalize the Silk Way and North-south Corridor together with successful reform measures are in progress, Azerbaijan will get more and more attractive spot for foreign investors.


CE: Do you think that concluding FTA-like agreements between neighbouring countries will promote attraction of strategic Korean investments?

Kim Chang-gyu: I highly appreciate your government’s efforts to induce foreign investments. Free trade agreements will increase the possibility for Azeri products to be exported. Most important is to build up a FTA network  with neighboring countries like Russia, Central Asian countries, Georgia and Turkey. An enlarged market  will ensure not only the success of domestic  businesses and foreign investors in Azerbaijan.


CE: What kind of problems do the Korean companies face currently at our market?

Kim Chang-gyu: Of course, the business environment of Azerbaijan has improved notably since the Azerbaijan government started reforms, but still more works to be done. Our geographically close neighbors like Vietnam, China, Cambodia, Malaysia and Indonesia are providing us with the best business conditions. Thus, the majority of Korean investments are going there. In order to attract Korean investments in Azerbaijan, the Azerbaijan government should provide more incentives to the Korean companies in terms of tax, customs clearance and administrative procedures. When I worked in the U.K. in 1995-98, I had witnessed their efforts to attract investments, for example, provision of one-stop service along with a free land plot for building a factory. The British authorities recruited employees for  Korean investments. The host country provided all the services. I highly appreciate the efforts of the government of Azerbaijan aimed at improving the business environment here. It achieved much success in this area and already secured some foreign investment flows into the country. I believe that as long as the reforms continue, many more foreign companies will invest their money in Azerbaijan. I would like to encourage your government to go further with the reform efforts.


CE: What are your expectations regarding the trade turnover between our countries in the outgoing year?

Kim Chang-gyu: In 2014, our trade turnover reached $216 million. Since the oil price started plummeting, the consumption of Korean products by the Azerbaijan people has also decreased. I think this year the trade volume between our two countries will stand at about $150 million.


CE: What kind of projects will help to boost the trade turnover?

Kim Chang-gyu: A new road always comes with an increase of communications and businesses. The improvement of transportation environment like North-South and West-East corridors will lead to an increase of visits and trade between our two peoples. Increasing peoples’ exchanges will be a solid basis to bring about a sustainable development of our bilateral relationship.

At this time, it takes 50 days for a container departing from Korea to arrive at Azerbaijan. But it is envisaged that the transportation period will be shortened up to 15 days when the Silk Way is in full operation. It is sure the fully operating Silk Road will increase economic cooperation between our two countries.


In the future we can imagine that the pipeline network could extend to China and further to Korea


CE: What opportunities for cooperation in the oil and gas sector do you see?

Kim Chang-gyu: Korea is far away from Azerbaijan and there is no oil and gas pipeline between us. Frankly speaking, it is not easy to export Azerbaijan oil and gas to Korea. But in the future we can imagine that the pipeline network could extend to China and further to Korea. I think it is possible, but not in the near future. Who can predict the future? Korea does not produce any oil or gas, but petrochemical products are number one export products of the country. So, our countries can cooperate in this area. Now Samsung is building a fertilizer factory in Sumgayit. It is really a big factory. Fertilizer manufacturing is only a part of petro-chemistry.


CE: What do you think about cooperation in the field of environmentally-clean production, alternative energy?

Kim Chang-gyu: Korea is one of the most advanced counties in the world in those areas. As to solar power and wind power generations, we have world class technologies. Currently Korean companies are building many solar power plants in many countries. If you want to find a reliable Korean supplier of solar energy plant, I will help you. 


I am planning to focus future technical aids from the Korean government on improving the sanitary environment of less developed areas in Azerbaijan


CE: Do the Korean companies plan to take part in privatization of state property of Azerbaijan? What conditions are necessary for that?

Kim Chang-gyu: Frankly speaking, I have not looked into this issue yet. I do not have information about privatisation because Korean companies have not shown any interest in it. But I would like to ask your government to extend their advertisement activities to Korean companies and then maybe it will stir the interest of Korean companies.


CE: Mr. Ambassador, you mentioned the medical industry. The Korean medicine is not widely represented in Azerbaijan. Which opportunities do you see in this industry?

Kim Chang-gyu: I think cooperation in the field of medicine is very important. We have a keen interest in cooperation in this area and this industry is my first priority. As you know, the Korean hospitals are excellent in their service. They have highly advanced medical technologies in place. Every year more than 250,000 foreign patients are visiting Korea to treat their diseases. Korea has developed a unique hospital system. When it is introduced in Azerbaijan, it could create a high-performance medical industry.

It is my view that the provision of humanitarian aids for the IDPs in Azerbaijan is most urgent. The Korean embassy held two events for visiting IDP settlement: the Xojavend settlement in Beylaqan District and the Jabrail settlement in Bilasuvar District. During my visit there I witnessed the sorrow and distress of the IDPs who lived far away from their homeland for a long time. During my visit there, a wide range of medical treatments was provided for the IDPs by the doctors and their assistants from the SEBA hospital in Baku.

Our two governments have carried out many technical aid projects, establishing an e-government training center and an e-college education system in particular. Other projects like a water supply and sanitation system in Kurdakhani settlement are underway now. I will focus future technical aids from the Korean government on improving the sanitary environment of less developed areas in Azerbaijan.


More than 50,000 Korean tourists can come in Azerbaijan if we continue our efforts to promote tourism.


CE: Are there plans to open a direct flight between Korea and Azerbaijan in the future?

Kim Chang-gyu: I have been discussing  with AZAL about launching a direct flight between our two countries.

I am suggesting two options. The first option is a direct flight with a short stopover in Bishkek or Ulanbaatar. The two cities are situated on the straight line between Baku and Seoul and many Korean citizens are living there. When we have direct flights, they will lead to a sharp increase of tourists between our two countries.   


CE: Can the development of tourism contribute to this?

Kim Chang-gyu: Yes, I believe that there will be a significant increase in the number of visitors in the near future. Currently the number of tourists comprises only 5,000 or 6,000. I think in 2-3 years it will increase up to 10,000. However, 10,000 passengers are still not enough for launching a direct flight. It must increase up to 14,000 to ensure  success of a direct flight business. Last year more than 350,000 Korean tourists visited Croatia. Why not they come here? More than 50,000 Korean tourists can come in Azerbaijan if we continue our efforts to promote tourism..

More than 20 million Korean tourists travel abroad every year. Recently Caucasus is getting a popular tourist destination in Korea. When we launch a direct flight between our countries, it will greatly contribute to the increase of tourists from each other.


CE: What prospects do you see for Azerbaijan students to study in Korea?

Kim Chang-gyu: Our countries have the agreement on cultural cooperation and an MOU on youth exchange. More than 70 Azerbaijan students are studying in Korea now with the support of the Korean government or Korean universities. I believe the number of youth exchanges must increase in consideration of our common cultural heritage. Azeri students in Korea are very active in study and work. I heard some Azeri people are working in Korea  as an elite manager.


CE: What events do you plan to host next year?

Kim Chang-gyu: In 2017, our two governments will hold the second meeting of the Intergovernmental Commission on Economic Cooperation. As I already said before, I am focusing my efforts on the five priority areas where I want to see some measurable progresses in the near future. Next year is the 25th anniversary of our diplomatic relation. I am preparing many big events, dedicated to the celebration of this date, like a joint concert of Azerbaijan Mugham and Korean Gayaguem musicians. A project to set up a Korean park in the center of Baku is in the work, which will comprise a beautiful Korean pavilion and a garden surrounded with Korean traditional terra cotta fences.  


The issue of TPP is very critical for Korea


CE: The outcomes of the elections in the United States were perceived differently across the globe. What impact will they have on the economies of the Asia-Pacific region, and South Korea in particular?

Kim Chang-gyu: I am very cautious to predict the way the Trump administration will head for in this situation when only three weeks have passed since his victory in the US presidential election. My diplomatic position also does not allow me to say freely about the policy orientation of a foreign government. Personally, my view is that Mr. Trump will compromise his rhetoric expressed during his election campaign with established policies of the US government. I think he will focus on increasing economic gains from their trade partners while decreasing economic loss. In this view, it is highly possible for him to give up the TPP and change FTAs with some countries with which the US has experienced a big trade deficit. I do not think there will be a drastic change in political area of Trump’s diplomacy. However, he might try to ease the United States’ financial burden accrued from stationing their troops abroad as much as possible.


CE: Why has not South Korea entered the Trans-Pacific Partnership along with other 12 countries?

Kim Chang-gyu: We did not hurry up to join the trade pact because we already had bilateral FTAs with major TPP member states: the US, Chile, Canada, New Zealand. And also, the TPP covers wider range of goods and services very sensitive to Korean industries.


CE: Is the economy of Korea capable of competing with the combination of a 30% global GDP and 40% of world trade?

Kim Chang-gyu: As a country whose economy heavily relies on trade, the issue of the TPP has been very critical for Koreans. Recently, a consensus for Korea to join the TPP was underway to be formulated. Let’s wait and see for a while the change of the Trump administration’s stance toward the TPP.

Thank you for the interview

Caspian Energy

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