Pakistan’s exports to South Korea doubled were the headlines in July last year appearing in the print media. It was stated by Director General of Korea Trade Investment Promotion Agency (KOTRA) in Karachi, Sung Jae Kim, during his visit to the Korangi Association of Trade and Industry (KATI) in Karachi.
He highlighted the growing trade relations between the two countries and emphasized the need for further bolstering cooperation as well as technology transfer from South Korea to Pakistan. In May this year, a meeting of the Economic Development Cooperation Fund (EDCF) Country Programme Mission of South Korea, led by Bonhyun Koo, Director of Asia Team, from the Export-Import Bank of Korea (EXIM Bank) took place in Islamabad.
Under discussion came the seven ongoing projects, totaling US$ 522 million that are currently being implemented across key sectors, including road infrastructure, information technology, and health. EXIM Bank was also commended for signing the Framework Arrangement (2022-26) and expressed the hope for the full utilization of the US$ 1,000 million committed by South Korea under this agreement.
South Korea has the 4th largest economy in Asia nearing 2 trillion dollars. The country’s GDP has more than tripled from USD 500 billion in 2000 to over USD 1.5 Trillion in 2020 and standing as the 12th largest in the world. In 2022, South Korea exported over $700 Billion, making it the 5th largest exporter in the world.
Exports of goods and services as a share of GDP last year stands over 40%, with machinery, heavy vehicles, minerals, and oils being the major sectors contributing towards the exports. The export-oriented policies of South Korea are one of the most important factors in its economic success. The country was the world’s sixth-largest exporter of goods and the eighth-largest importer of goods in 2022, with trade accounting for 97% of its GDP.
Trade between Pakistan and South Korea is on the increase, but much more is desired considering the potential that exists for the mutual benefit of both countries. In 2022, South Korea exported $1.32B to Pakistan. The main products that South Korea exported to Pakistan were Cars, Motor vehicles; parts and accessories and Refined Petroleum. On the other hand, Pakistan exported its traditional items comprising of textiles, made up garments, sporting goods, carpets, essential oils, perfumes, cosmetics, toiletries and the like.
Cooperation between the two countries go back decades when Pakistan assisted South Korea with its development program and assigned the Planning Commission of Pakistan to share its 5 Year Development Plan as at the time, Pakistan was amongst the fastest developing country in the region.
South Korea is now the 13th largest world economy, 5th largest exporter and a member of the G20. With a GDP of over US$ 1.5 Trillion, its exports stand at almost half. Presently nearly 20 Korean Companies are already operating in Pakistan and with the impetus provided by the input of $1 Billion by the South Korean Government under their Economic Development Cooperation Fund (EDCF), more will find Pakistan as a potential destination for trade and investments.
Similarly, a loan agreement to build Pakistan’s first state-of-the-art multipurpose Information Technology Park worth Rs9.2 billion was signed between the government and South Korea Eximbank (KEXIM) much earlier. Korean side is well informed about the combination of snow-capped mountain ranges of Pakistan, lakes, valleys, rivers, deserts, history and culture that makes Pakistan a unique tourist destination of the world; something that can attract Korean tourists to Pakistan.
Pakistan with its 240 million population and a land of 800,000 square kilometers with abundant natural and human resources stands as the 24th largest economy of the world in terms of purchasing power parity (PPP) and 46th largest in absolute dollar terms and expanding at a projected rate of 3% despite the adverse global situation and specially in the region.
Encouraging reports are surfacing in the capital markets around the world drawing attention to the potential which Pakistan holds and is evident by the performance of stock markets which has crossed the phycological barrier and has over shot the 80,000 points (PSX 100 index).
Credit ratings on Pakistan is witnessing a positive trend. Their assumption is based on the promising outlooks for investment and future growth for reasons of economic liberalization which includes long awaited privatization of public sector corporations, decrease in budget deficits and gradual increase in foreign currency reserves.
To facilitate, fast-track and protect foreign investments, the Government of Pakistan has established a high-level oversight committee, known as the Special Investment Facilitation Council (SIFC) which has largely contributed towards the optimistic vibes being witnessed.
Above all, the investment pledges for what is termed as China-Pakistan Economic Corridor (CPEC), where China continues to invest in excess of 45 Billion Dollars for infrastructure improvement and towards which, no less than the President of China himself had visited Pakistan. This is seen by many as a game changer for Pakistan in the days ahead and alerting many world capitals to see Pakistan as a potential destiny for trade and investments.
Industrial units dealing in cement, steel and the like have benefited by the growth in construction sector by almost 15% with some announcing enhancement in their production capacities. Dividends pay offs, and especially by MNC’s in some cases have exceeded 100% per annum.
The 40 years of diplomatic relations between Pakistan and South Korea has progressed to a point where more than 10,000 Pakistanis are working in South Korea while nearly 500 Koreans are resident in Pakistan, most of whom are related to either business or are working on projects funded by South Korea. The relationship between Pakistan and the Republic of South Korea is marked by characteristic warmth and candour and features mutually beneficial cooperation in diverse fields.
Names such as Lotte, Kolson, POSCO, Kumho, LG, KIA, Daewoo, Samsung, Hyundai, are fast becoming familiar names in Pakistan with some common in households. The emerging scenarios in both countries are finding common grounds to work together and play their relevant roles to improve the economic, social and cultural ties between Pakistan and South Korea. Regular exchange of delegations is also taking place to further improve upon each sector of cooperation.
Copyright Business Recorder, 2024
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