SEOUL: Korea’s exports to Iran could more than double over the next 10 years if the country successfully expands its business ties with the Middle Eastern nation, a local think tank said Wednesday. In addition, a total of 680,000 new jobs could be created here by 2025 in the construction, petrochemical, automobile, electronics and culture industries.
The Korea Economic Research Institute (KERI), affiliated with the Federation of Korean Industries, said that Korea’s outbound shipments to Iran will total $84.5 billion from this year through 2025, or an average of $8.45 billion per year, if both sides follow through on a number of business deals, signed during President Park’s recent visit to the Middle Eastern country. Asia’s fourth-largest economy exported goods and services to Iran worth $3.75 billion in 2015.
KERI said builders, petrochemical companies and automakers will likely be the biggest beneficiaries of the increasing economic cooperation, adding that electronics and other consumer goods makers, as well as those producing movies and other cultural content will significantly reap benefits.
“The growing Korea-Iran business relations are also expected to generate more than 680,000 new jobs in these benefiting industries, and send positive ripple effects across other sectors,” said Choi Nam-suk, a professor at Chonbuk National University, who co-authored the report. “As a steppingstone toward achieving a greater economic cooperation with Iran, the government and businesses should give their all to realize dozens of contracts signed between Korea and Iran during President Park’s state visit.”
Choi said in order to bolster outbound shipments to Iran, Korea needs to expand investments there to build plants and other business-related facilities. “Since 2012 when the international community imposed sanctions on Iran, Korea’s investments have declined sharply. We need to reverse the trend,” he said. “Many more domestic companies should make inroads into the Middle Eastern country.”
During President Park’s Iran visit on May 1 and 2, Korean companies signed a combined 66 pacts for 30 projects, valued at $37.1 billion. They are also expected to secure additional deals worth $8.5 billion, according to government officials.
Among others, domestic builders won contracts to build a cross-country railway valued at $5.3 billion, and refining plants for $2 billion. Other businesses also signed contracts to construct hospitals and other urban infrastructure worth billions of dollars. But most of the pacts were agreed on non-binding terms. The professor called on the government to extend greater financial support to companies looking to do business in Iran, stressing that securing finances is the key to making Iran agreements legally binding.
“Korea needs to double its efforts to establish closer relations with international financial institutions to help local firms secure project financing from them,” he said. “State-run banks can also play a crucial role by providing much-needed financing to builders and other firms entering the Middle Eastern nation.” Through the Korea Eximbank and other state-run financial institutions, policymakers plan to extend $25 billion in project financing.
