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Caspian Energy Journal Caspian European Club
Friday, 24 May 2019 10:30

Economies of Korea and Azerbaijan are capable of supplementing each other, Ambassador Featured

Economies of Korea and Azerbaijan are capable of supplementing each other, Ambassador

Caspian Energy (CE): Your Excellency, to which fields do you give priority to develop economic cooperation between Azerbaijan and Korea? What potential do you see for Azerbaijani investors and vice versa?

Kim Tong-op, Ambassador Extraordinary and Plenipotentiary of the Republic of Korea to the Republic of Azerbaijan: In 2006-2007 Korea was involved in geologic exploration works carried out on the promising field Inam located in the Caspian Sea. To our regret, the results of the geologic exploration works were not positive and since then the Korean side has made no attempts to be involved in the oil-gas drilling sector of Azerbaijan. As far as Korean companies are concerned, the prospect of joining internationally competitive projects on construction of infrastructure and supply of major equipment sounds more realistic than direct participation in Azerbaijani projects on energy resources development. Noteworthy is the completion of SOCAR Carbamide plant built within the area of Sumgayit technopark by Samsung Engineering.

CE: Initiating such big transport projects as Baku-Tbilisi-Kars and North-South, Baku International Sea Trade Port, Azerbaijan is turning into an important player on the market of transit transportation. To what extent are these projects attractive for South Korea?

Kim Tong-op: The Northern transportation corridor (North-South) is a promising business project and Azerbaijan is expected to start developing rapidly after becoming an international logistics center. In this regard, the experience that the Korean companies have in the field of production of railway transport facilities and operation of international ports is facilitating their involvement. As far as the current operations are concerned, one of the Korean companies is presently engaged in construction of toll motorways M1 and M3. 

CE: What is the rate of goods turnover between the two countries fixed in 2018? What are the forecasts for coming years?

 Kim Tong-op: The goods turnover between Korea and Azerbaijan has been growing steadily since the establishment of diplomatic relations in 1992. However, the demand decline has been seen in Azerbaijan over the last years due to the fall of oil prices, which causes stagnation. Last year the volume of the goods turnover totaled about $180million which is very low, given the potential of cooperation between the two countries.  However, the scale of the direct goods turnover, which is not taken into account by the statistics of the two countries, is significant. It means that the real trade volume between our countries is much higher than the official statistics. For instance, Samsung Electronics smart phones and Hyundai-Kia Motors vehicles which possess the significant share in Azerbaijan’s market are produced and imported from the plants located in Russia and the EU. Thus, they are not reflected in the trade volume between the two countries. I am sure that the bilateral trade will keep growing in future.

The world oil prices are expected to grow and boost the trade development in different sectors owing to the growth of Azerbaijan’s interest in the Korean production. It is expected that there will be a particular demand for electronics, vehicles, construction of infrastructure and plants, cosmetics and medications, as well as for everyday products.

CE: The Economic Development and Cooperation Fund (EDCF) and the Korea International Cooperation Agency (KOICA) have been implementing significant programs and projects in Azerbaijan for many years. What are the further plans in regard to cooperation in this direction?

 Kim Tong-op: Until 2017 Korea appropriated Azerbaijan the funds to the amount of $62.62 million within the framework of the Official Development Assistance (ODA). Funds worth of $26.82 million were allocated through the Economic Development Cooperation Fund. In total, it makes $89.46 million.  59.5% of allocated funds account for water supply and hygiene projects, 16.7% for education, 11% for public administration. Besides, the number of trainees invited to Korea within the framework of the program on the potential ramp up reaches 700 people. The total sum allocated for business development made $215 billion, which includes the project for Teachers’ Capacity Building and Establishment of Educational Information System, the educational program in Korea for the public jobholders and the industry of construction of sewage purification facilities in Pirshaghy. The Country Partnership Strategy (CPS) for 2016-2020 was developed in order to raise efficiency of cooperation between Korea and Azerbaijan. Telecommunications, management of water resources and health hygiene, public administration and regional development are the key directions of cooperation. Azerbaijan will continue lending support to sustainable and balanced development, considering the key lines of cooperation of the CPS, as well as the state program on development and the state economy of Azerbaijan, indicated in the strategic road map. To support sustainable development of the non-oil sector which Azerbaijan is currently focused on, the support to the agricultural sector will grow and the cooperation in the field of tourism and SME will take bold steps forward. Moreover, projects aimed at vulnerable groups and associated with women’s entrepreneurship will be developed. 

CE: The tourism sector plays an important role in the economic development and rapprochement of peoples.  Is there a growth in this field between our countries? What kind of work should be carried out in this direction?

Kim Tong-op: The number of the Korean tourists visited Azerbaijan in 2018 totaled 7,854 people, which is 70% higher than the figures of 2017. The interest in the Caucasus countries is growing in Korea, and Azerbaijan has become an important tourism destination. It seems like that the Azerbaijani population’s interest in Korea is increasing as well. I think you are already well familiar with the Korean culture, including K-Pop, the traditional Korean cuisine typified by Kimchi, Bulgogi, as well as the beautiful landscape and hospitality. The geographic location between the two countries and absence of direct flights limit quick increase of tourists. But the presence of the certain trend of the increase of tourists can lead to the opening of direct flights. We are also working with the Tourism Agency of Azerbaijan and Azerbaijan’s embassy in Korea in order to extend the exchange field between the two countries. 

CE: Which tasks are on the agenda of the following session of the joint intergovernmental commission for economic cooperation?

Kim Tong-op: The first session of the joint commission for economic cooperation, which took place in Seoul in June 2016, became a favorable opportunity for promoting mutual understanding between the two countries and discussing major issues of economy and trade. The Korean side requested to free the grant-based assistance projects from taxes. As a result, a new grant-agreement on provision of assistance was signed in January 2019. Besides, a number of issues regarding the Korean companies’ problems with accounts receivable, delays in customs registration and difficulties with their engagement in public purchasing, were submitted. As a result, negotiations were held with the Azerbaijani side and many of the issues found their solution. It is expected that the second meeting of the joint commission for economic cooperation will focus on the ways of extending the engagement of the Korean companies in dynamic national development program of Azerbaijan and on measures of cooperation aimed at promoting Korean products.

CE: Which innovative projects and technologies is Korea ready to offer to Azerbaijan? Which successful projects have already been implemented and are noteworthy?

Kim Tong-op: The Korean companies competing with leading world producers are making many efforts to introduce innovations and develop technologies. They are constantly working over new products and technologies. As an example, I can bring projects implemented by the Korean companies in Azerbaijan. It is the completion of SOCAR carbamide plant construction carried out in the area of Sumgayit Techno Park by Samsung Engineering Company in January of this year. The other Korean company S-Traffic is participating in the construction of the toll highway M1 and M3. SK Company was a main partner in setting the intellectual management over the traffic in the city of Baku.

Azerbaijan is rich in natural resources such oil and gas, while Korea possesses high level of technological and human resources. As a result, the economies of both states are capable of supplementing each other. The prospects of cooperation in different areas are wonderful.

CE: What are the prospects of cooperation between the two countries in the energy field?

Kim Tong-op: Due to the presence of the leading world companies in Korea, engaged in such fields as nuclear power plants, solar energy, wind energy, it is hoped that cooperation in different areas of energy will only strengthen in future. As I have mentioned above, in addition to the participation of the Korean companies in projects with direct investments, the prospects of cooperation in the oil-gas field and other adjacent fields are quite real. Therefore, we can expect the yield of positive results from the two countries’ cooperation in the energy field.

 

                                                                                               

Thank you for the interview.

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