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Leaders agree to broaden ties with $30 billion investment

13 agreements signed cover cooperation in space, hydrogen, SMEs

By Shin Ji-hye

Published : Jan. 15, 2023 - 14:06

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South Korea's President Yoon Suk Yeol and his wife Kim Keon Hee (center) walk alongside Emirati President Sheikh Mohammed bin Zayed al-Nahyan (left) during a welcome ceremony at the royal palace in Abu Dhabi, United Arab Emirates, on Sunday. (Yonhap) South Korea's President Yoon Suk Yeol and his wife Kim Keon Hee (center) walk alongside Emirati President Sheikh Mohammed bin Zayed al-Nahyan (left) during a welcome ceremony at the royal palace in Abu Dhabi, United Arab Emirates, on Sunday. (Yonhap)

ABU DHABI, United Arab Emirates — The United Arab Emirates has decided to invest $30 billion (37 trillion won) in South Korea at a summit held between South Korean President Yoon Suk Yeol and Emirati leader Sheikh Mohammed bin Zayed Al Nahyan on Sunday, during which the leaders agreed on stronger strategic cooperation, the South Korean presidential office said.

“We decided to make the investment with confidence in the Republic of Korea that keeps its promises under all circumstances,” the UAE leader was quoted as saying by Yoon’s office, using the formal name for South Korea.

The $30 billion is considered to be the largest-ever investment in a single country by the UAE. Previously, the largest cross-border investment by the UAE was about $12.2 billion in the United Kingdom. It also promised to invest about $5 billion in China and $1.6 billion in France.

The UAE plans through its sovereign fund to invest $30 billion over the next few years in high-level next-generation nuclear power such as small modular reactors, energy technologies using hydrogen, renewable energy such as wind and solar power, and defense.

The two leaders also confirmed they would strengthen strategic cooperation in nuclear and hydrogen energy in the UAE’s post-oil era, as well as collaboration in space, carbon emissions and technological innovation.

Through the meeting, Yoon said he was “looking forward” to strengthening strategic cooperation not only in the four key fields of nuclear power, energy, investment and defense, but also in health and medical care as well as cultural and people-to-people exchanges. He hoped that bilateral cooperation would “serve as an important starting point for advancing the special strategic partnership” to the highest level.

“I believe that the fields of cooperation between the two countries are limitless,” Yoon said.

“The UAE is also actively promoting cooperation in high-tech industries such as digital transformation, mobility, aerospace, materials and parts and bio(technology),” Yoon said, adding, “I believe that Korean companies with world-class competitiveness in the UAE will be good partners.”

The UAE president, in response, said that his nation is ready to expand cooperation with South Korea in all fields, including the peaceful use of nuclear power, renewable energy, hydrogen, defense technology, climate change, space, digital transformation, advanced infrastructure, smart agriculture, food security and water resources.

“The UAE currently has a special interest in climate change and responding to climate change,” he said. “We also believe that cooperation with Korea in the field of defense is very important.”

Of the 13 memorandums of understanding signed in the presence of the two leaders, a joint declaration to strengthen strategic energy relationships was included to substantially decrease carbon emissions in industries through a shift in energy use to hydrogen.

Under an agreement on an international joint stockpile, Abu Dhabi’s state oil firm will reserve oil in South Korea’s southwestern port city of Yeosu and give the country priority purchase privileges in the event of an energy crisis.

In the UAE’s first state visit by a South Korean leader, Yoon landed in Abu Dhabi on Saturday accompanied by eight Cabinet members and more than 100 top businessmen, as Asia’s fourth-largest economy seeks a new engine for to kick-start stagnant growth.

There would be a total of 40 memorandums when including the number of agreements signed at the private level on Monday, the office added.

When asked by a reporter which sovereign wealth fund would be making the investment, the presidential office said that the UAE did not specify. The investment is expected, however, to be made by several funds such as the Abu Dhabi Investment Authority and the Investment Corporation of Dubai.

When asked of the timeline for the $30 billion investment, the office said it was not specified, and that that there were no follow-up measures between the UAE and Korean companies for now.

The office also that said in order to implement the investment agreement quickly and smoothly, the Korean government will establish an investment platform where the state-run Korea Development Bank and the private sector will participate.

Experts called the conservative leader’s choice of the UAE as his first overseas trip “wise,” as the Middle Eastern country has fared relatively well in the global economic downturn. The trip could also open up many opportunities for Korean firms amid increasing protectionism among South Korea’s economic partners, they said.

“It is a wise decision for the president to visit the UAE as the first overseas destination this year,” said Bark Tae-ho, president of the Lee & Ko Global Commerce Institute and former trade minister under the Lee Myung-bak administration.

“Financial institutions have recently lowered their global economic growth forecast this year,” Bark said. “The three major economies of the US, the European Union and China are expected to go into economic recession.”

“Still, some regions — including India, Southeast Asia, the UAE and Saudi Arabia — are predicted to fare relatively well,” he said. The UAE in particular was not hit as hard by the pandemic due to the rise in energy prices and its role as an intermediary to Europe and the world in the financial and aviation sectors, according to Bark.

The International Monetary Fund predicted in December that global growth is forecast to slow from 6 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023. The World Bank said this week the global economy will come “perilously close” to a recession this year, led by weaker growth of all the world’s top economies — the US, Europe and China.

However, the WB revised upward the UAE’s growth forecast for 2023 to 4.1 percent this year on the back of the expansion of non-oil sectors including real estate, travel and tourism, hospitality, manufacturing and transportation.

“Yoon’s visit to the UAE at the beginning of the year may seem rather out of the blue, but in fact Korea and the UAE have had a good relationship,” he said.

The UAE is the only country in the Middle East that has a “special strategic partnership” with Korea, with many Korean tech, energy and construction firms entering the nation. In 2019, a consortium dubbed “Team Korea” won the Barakah nuclear power plant project as Korea’s first overseas nuclear power plant construction project.