Now comes Korea and Japan. More Expolitation Or Good? Anyone Looking Out to Make Sure African Countries Make Good Choices?

01-08-2008 16:36

Korea Seeks to Sign FTAs With African Nations

By Lee Hyo-sik
Staff Reporter

South Korea is looking to boost economic ties with African nations to secure oil, natural gas and other natural resources, and help local businesses advance into unexplored markets.

The government is planning to sign a free trade agreement (FTA) with South Africa and other south African countries, and expand a list of non-tariff items imported from Africa.

The Ministry of Finance and Economy Tuesday unveiled these and other measures to help expand the country’s economic ties with resource-rich African nations.

It said the government is considering signing FTAs with the Southern African Customs Union (SACU), consisting of South Africa, Botswana, Lesotho, Namibia and Swaziland.

``Increasing economic cooperation with the SACU will boost Seoul’s efforts to participate in a number of natural resource and infrastructure development projects in Africa,’’ a ministry official said.

The government will expand the number of diplomatic posts on the continent to provide logistics and administrative support to local energy and construction companies operating there, while asking African governments to allow Korean businesses to participate in oil and other natural resource development ventures. It also plans to lift tariffs on 95 percent of items imported from African economies by 2011.

The ministry said the government will increase low interest-rate loans to Africa to $700 million by 2011 from $35 million in 2006 to raise Korea’s profile there. It also plans to provide grants and other aid worth $61 million in 2009.

The government move comes at a time when Korea’s Asian rivals have been aggressively expanding economic ties with African nations over the past few years to secure oil and other natural resources.

The resource-rich continent has been attracting attention from China and other resource-hungry economies. Over the past few years, senior Chinese government officials, including Chinese President Hu Jintao, have visited a number of African nations and offered financial aid and other assistance worth billions of dollars, in return for rights to develop oil fields and mineral mines.

Also, Japan has also been active in increasing economic cooperation with Africa. In particular, extensive overseas networks of Japanese trading companies have played a large role in securing natural resources from Africa for the world’s second largest economy.

Meanwhile, the ministry also announced a package of measures Tuesday to encourage public companies to advance into overseas markets as part of government efforts to turn them into more efficient and profit-oriented entities.

The government will ease various administrative restrictions that have restricted state-invested firms from operating overseas. It first plans to make it easier for public companies to set up overseas affiliates to boost their profitability.

To help state-run firms advance into foreign markets, the government will also allow the Export-Import Bank of Korea to increase loans set aside for foreign investment and overseas resources development to 8 percent, or 3.99 trillion won this year and to 9.12 trillion won by 2015. It is currently allowed to use 7 percent of its total loans, or 2.47 trillion won, for such purposes.

Such measures are seen as part of government efforts to boost the efficiency and productivity of public firms. Last week, the government said it will either overhaul or privatize a number of state-invested public companies in line with President-elect Lee Myung-bak's pledge to drastically restructure them.

During the presidential campaign, the former Seoul mayor spoke out against state-run companies on many occasions, pointing out that public firms are operating without proper supervision and that their size has become excessively large.

He said state enterprises have focused only on increasing the number of employees, while neglecting to boost profitability and organizational efficiency.