Uzbekistan’s abundant natural resources and manpower of are creating a strong win-win relationship with Korea’s capital, technology and economic development experience.
Since the establishment of diplomatic ties in 1992, Korea and Uzbekistan have rapidly increased the mutual exchange of personnel and goods. The pace can be attributed to their complementary economic structures. “Uzbekistan is eager for national growth and Korea has the experience of dynamic economic development that the country is seeking, which means the two can be perfect partners,” said the chairman of the Korea Chamber of Commerce & Industry, Son Gyeong-shik, adding, “Bila-teral economic cooperation is especially speeding up these days, as Korean corporations participate in large-scale projects in the Central Asian nation.” Vitali Fen, ambassador of the Republic of Uzbekistan to Korea, stated in a recent interview with BusinessKorea, “The combination of Korea’s advanced technology and our abundant natural resources is making reciprocal projects possible in various fields.”
Navoi Airport to Be Commensurate with Seoul/Incheon International
As an example, Hanjin Group is leading the Navoi Project with the Uzbekistani government’s backing. The purpose of the project is to modernize Navoi Airport, turning it into a logistics hub of Central Asia. Hanjin has managed the airport on commission since January 2009, and carried out extensive facility remodeling. “The cargo terminal at Navoi is aiming to become a global standard installation, and its benchmark model is the Seoul/Incheon International,” remarked the ambassador. He added that Hanjin has done a fabulous job in such a short span of time.
KT is in charge of supplying virtual private network (VPN) solutions to the airport, as well as establishing Internet networks. KT is also providing wireless LAN, CCTV and many other package solutions to the field office of the US$130 million-worth expressway construction project won in May 2010 by POSCO E&C. The State Committee of the Republic of Uzbekistan on Statistics, the Ministry of Finance of Navoiy Province and financial institutions in the region are also using KT’s teleconference solutions. “Our mobile WiMAX technology and solutions constitute a very successful case of overseas market penetration,” said KT’s senior managing director Jo Geun-mook.
Surgil Project, Success Model of Korea’s Resource Diplomacy Initia-tive
The Surgil Project is another success story of the mutual economic collaboration. The ambassador commented that the deal is the most remarkable outcome of President Lee Myung-bak’s recent visit to his country and it graced the 20th anniversary of his nation’s independence yhis year. Korea is regarding the project as a major accomplishment in its resource diplomacy drive as well.
During the Surgil project, gas fields with a combined area of 130 billion cubic meters will be developed for commercial production, while gas and chemical plants are constructed. A total of US$4.16 billion will be invested, with at least US$500 million and US$2.4 billion going to gas field and plant parts, respectively. The undertaking is scheduled to begin early next year, with commercial production expected to kick off from late 2015. Korea is scheduled to run the facilities until 2040.
The project is a typical example of eco-systemic overseas resources development. Shares and profits are split between UZKorea, a consortium of Korea Gas Corporation, Honam Petrochemical and STX Energy, and Uzbekistan's national oil and gas company Uzbekneftegaz (UNG). GS E&C, Samsung Engineering and Hyundai Engineering will participate on an engineering, procurement and construction (EPC) basis. The size of the EPC work amounts to US$2.1 billion. When the gas fields are developed and petrochemical plants built, the capital invested by both nations’ corporations will flow into Korea, guaranteeing continuous profit down the road.
Korean CNG Companies Stepping into Uzbekistan
Uzbekistan has recorded an annual growth rate of at least 8% during the last five years. Meanwhile, its automobile demands skyrocketed from 99,000 in 2005 to 227,000 in 2010. The sector’s annual average growth rate amounts to 126%.
In March 2008, GM and UzA-vtoSanoat established the joint venture GM Uzbekistan. UzAvtoSanoat is an auto manufacturer under the Uzbekistan government. Since then, GM Korea has exported models such as Windstorm, Tosca, Matiz and Lacetti to the Central Asian nation on a knockdown basis for local production and sales.
Uzbekistan has rich natural gas reserves, ranking in the world’s top ten in terms of proven reserves and production. However, it is not home to abundant petroleum resources. This is why the government intends to gradually replace gasoline and diesel vehicles with compressed natural gas (CNG) ones. This policy has provided an opportunity to Korean enterprises.
In January 2011, Kolon I&Networks invested US$83 million in Uzbekistan’s CNG charging station project to build and operate 50 such facilities in major cities and highway points for the upcoming four years. It also established a cylinder manufacturing plant with an annual capacity of 120,000 pieces in the Navoi Free Industrial Economic Zone. Kolon is planning to partner with small Korean firms like Kwangshin Machinery, Enginetech and NK in order to contribute to mutual prosperity between large corporations and their smaller peers.
Three months later, GM Uzbekistan and ENK, a Korean CNG container maker, signed a supply contract. The size of the shipment will amount to US$26 million (100,000 units) for the coming one year.
Korean Securities Systems Exported to Uzbekistan
Nowadays, Korean celebrities and the language they speak are enjoying huge popularity in Uzbekistan. Some 12,000 locals attend 117 Korean language schools there. An increasing number of Uzbe-kistanis are visiting Korea, while approximately 21,000 Uzbekistan nations lived in Korea.
On August 23 of this year, when the presidents of both nations met, the Korea Exchange (KRX) concluded an export agreement with its Uzbekistani counterpart, promising to help renovate the nation’s securities IT systems. “We believe that the export will not be limited to software or technology, but cover our advanced financial modus operandi,” said a KRX executive. The IT systems are going to be developed by KOSCOM, which has sponsored IT education centers in Uzbekistan as part of its global CSR activities.