Korean Economy and Economic Korean Economy and Economic
Relations Relations
between Korea and Israel between Korea and Israel
Youngsam Ma Youngsam Ma
Korean Ambassador to Israel
Korean Ambassador to Israel
Part I.
Korean Economy
It was merely 60 years ago that Korea was devastated by the Korean War.
The modern images of Korea you see today, however, are proof positive of the determination of Koreans to leap into the 21st century.
Korea has gained experience recovering from one economic crisis in the recent past and will use the same determination
to overcome the present one.
Sports
No.5 in 2010 Vancouver Winter Olympics
No.7 in 2008 Beijing Summer Olympics
No.4 in 2002 Word Cup
Science & Technology
4th highest R&D investment per GDP
(2.6% in Korea, compared to 4.5% in Israel)
Human Resources
26th largest population (48 million)
Highest ratio of college degrees per capita (56% in Korea, OECD
average is 34%; 2007)
Economy
15th largest GDP (832 billion USD)
9th largest export volume (363 billion USD)
Industrial
Competitiveness
Advanced industrial base with balanced traditional &
High-tech industry combination
Samsung Electronics and Hynix rank 1st and 2nd with 50% share of the world’s DRAM market.
Korean shipbuilders ranked 1st globally in terms of new orders(40%) and volume of vessels built(37%) of all orders worldwide.
World’s 5th biggest producer for 4 consecutive years
4.09 million (2007) and 3.83 million (2008) unit production.
No. 1 market share in LCD(46.1%), PDP(52.3%), OLED(45.3%)–Major players: Samsung Electronics, Samsung SDI, LG Display, LG Electronics
* As of 2008
* Source : Display Search (Revenue basis)
Global leading industries
0 5000 10000 15000 20000 25000
1960 1970 1980 1990 2000 2010
GDP per capita (Korea)
GDP per capita
• [1960] GDP per capita 79$ [2010] GDP per capita 20,200$
• Average growth rate 1960-2010: 7.5%.
GDP growth Rate in Korea
Accession to OECD US$
Asian financial crisis Global economic crisis
2010 data according to first 2 quarters (Q1 and Q2)
GDP growth rate
Annual
%
Korea’s Economic Development : Export-led growth
• Development of Light Industries in 1960s
• Developing Heavy and Chemical Industries in 1970s
- Steel, Petrochemical, Ship building etc
• Towards more Diversified Trading Country : 1990s- - Actively participating in globalization : DDA/FTA
• Export-oriented Industrialization
- no domestic market - no natural resources
• High Dependence on Human Capital
• Government led but
respecting market
mechanism
Entered into force
Awaiting ratification
Expected to be
concluded soon Underway On the agenda
Chile, Singapore,
EFTA, ASEAN U.S., E.U. India, Canada GCC, Japan, Australia, New Zealand, Mexico
Israel, Peru, China, Russia, MERCOSUR, Turkey
“Total FDI for the decade since the Asian Financial Crisis (1998~2008) is as 5 times as that of 1962-1997.”
1991 1992 1993 2.5
5.0 7.5 10.0 12.5 15.0 17.5 20.0
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
(US $ billion) Notification basis
* A total of US$124 billion from 1998 to 2008
※ Source : Ministry of Knowledge Economy
Foreign direct investment into Korea
Part II.
Korea-Israel economic
relations
Bilateral Treaties and Agreements
• Visa waiver Agreement (1995)
• Avoidance of Double Taxation Agreement (1997)
• Agreement on Bilateral Cooperation of Industrial Research and Development in Private Sector (1998)
• Agreement on Investments Promotion (1999)
• Agreement on Economic Cooperation (2000)
• Agreement on Maritime Transport between Korea and Israel (2004)
• Agreement on Bilateral Cooperation in Private Sector Industrial Research and Development (2005)
• Agreement in the Field of Tourism(2005)
• MOU of Understanding on Cooperation in Environmental Matters (2008)
• Joint Declaration on Cooperation in the field of Small and Medium sized Enterprises (2009)
Same year of Governments’ establishment : 1948
Similarities between two countries
Two successful economies from scratch
Korea 15th economy, Israel 27th economy
Limited Territory and Lack of Natural resources
Main driver for economic growth is human resource
Heavy Dependence on Export for economic growth
Korea 60%, Israel 50%
Complimentary (not competitive) industry structure with each other
Woking diligently with overcoming hostile neighbors
Strong survival capabilities with keeping the identity
Enthusiatic effort for their children’s education
Bilateral Trade
2002 2003 2004 2005 2006 2007 2008 2009 2010 (1-9)
Export 501 578 851 850 746 970 1,011 729 724
Import 322 318 477 504 542 737 895 691 568
Total 823 896 1,328 1,354 1,288 1,707 1,906 1,420 1,392
• Reopening of Israeli embassy (1992)
• Opening of
Korean Embassy (1993)
• Establishment of Diplomatic relations (1962)
• Opening of Israeli Embassy (1964)
• Global economic crisis
• Asian financial crisis(1997)
Closing of Israel Embassy(1978)
Bilateral Trade(2)
• Israel is Korea’s 57
thlargest export destination
Major exports : passenger cars, cellular phones, PCs/laptops, plastics
Korea is Israel’s 15th largest export destination
• Israel is Korea’s 44
THlargest importing country
Major imports : electronic machinery, optical measuring&checking instruments, organic chemicals
Korea is Israel’s 14th largest importing country
Bilateral Investment
Investments between both countries have not been very active
Korea Korea Korea
Korea Israel Israel Israel Israel
28.5M USD (0.01% of the total)
32.2M USD (0.02% of the total)
•
Representative Investment case
- Samsung’s Takeover of “Transchip”(Developer of the SMOS image sensor) in 2007: Now reorganized to Samsung R&D Center
- Iscar’s Takeover of “Korea Tungsten Co”(renamed into Taegutec) in 1998: Additional investment to Taegutec further
•
Korean Companies in Israel
: Samsung, LG, Korean Air, Posco etc•
Israeli Companies in Korea :
Rafael, Orbotec, IAI, GaltronicsTourist exchange
2007 2008 2009 2010(Est)
Korea Israel 33,900 37,500 21,000 50,000
Israel Korea 6,757 7,095 5,000 8,000
• Since 1990s, more tourists from Korea than from the rest of Asia combined
• Korean Air Direct Flight : 3 Times a week
• Working Holiday Agreement (pending)
- The youth (18~30 years old) / 1 year
Cooperation in Science and Technology
• Incorporation of the electro-optic equipment of the Israeli El-Op company in Korean satellite (Arirang II, 2006)
• R&D Center run by Korean Companies
- Samsung Electronics : ① semi-conductor (Tel Aviv)
② DM&Communication (Yakum) - LG Electronics : Herzliya
- Postec(expected)
• MOU on Cooperation in the field of Water Supply and Technology (2009)
• MOU between KIST and Weizmann Institute (2010) - Cooperation on renewable energy and cleantech
• MOU between Posco and MOITAL in Industrial R&D Cooperation
Electric power plant projects
Korean construction and engineering companies actively participate in Israeli power plant projects.
May 2010: Doosan won a tender from the IEC for sulfur dioxide scrubbers (180M USD).
May 2010: Daewoo International won a tender from Israel Corp for Rotem power plant construction
(470M USD).
Cooperation in Defense Industry
84.8 84.8 84.8 84.8
8.2 8.28.2 8.2
29.129.129.1
29.1 34.434.434.434.4
340340 340340
0.8 2.9 3.4 11.7 4.6
0 50 100 150 200 250 300 350 400
2005 2006 2007 2008 2009
Yearrrr
US$1 Mil.
Import to Korea Export to Is rael
Defense industry trade
Major exports: infra-red camera, ammunition
Major imports: Radar Warning Receiver (RWR), Air Combat Maneuvering Instrumentation (ACMI), Happy UAV (for attacking Enemy
‘s Radar System)
T-50(Advanced Training Jet)
• Bid for New advanced training jet - 30-35 units / US$1 billion by 2014
• T-50 (Golden Eagle)
- co-developer : Lockheed Martin - interoperability with F-15/16/35
- first supersonic trainer in the world
- Quality already proved by Korean AF
- Israeli core equipment into T-50
Tools for Cooperation : R&D/Venture Capital Fund
• Kor-Il Fund
- Established in 2001
- USD 1.5Million from Each Country(Annual) - cash grants up to 50% of the eligible
R&D cost to a maximum of USD 500,000
• Joint Venture Capital Fund
① Up to USD 150 Million Fund - KVIC + Israel VC(“A”)
② Up to USD 50 Million Fund
- KVIC + Korean VC + Israel VC(“B”)
Korea-Israel FTA
• May 2009 ~ Aug 2010 Joint Study for the feasibility of FTA
• Governmental Negotiation will be launched after domestic procedure of both sides
• Benefits of FTA for both countries
- Surge of trade volume(20~30%) and investment
- Improvements of competitiveness in high-tech
industry based on mutual cooperation
Huge potential for future cooperation(1):
Cleantech
<Korea>
• Korea’s New Growth Vision
- Low Carbon Green Growth - Renewable Energy 2.4% 11%
(2030)
- 36 billion USD investment
• Strong economic and industrial base
- Solar energy, LED, Secondary battery
<Israel>
• Strong technological base - Renewable Energy 10%
(2020)
- 8 Israeli companies among Guadian’s top 100
- Solar : Solel, BrightSource SolarEdge,
Tigo energy - Wind : IQWind
- Electric Car: BetterPlace - Fuel Cell: EnStorage - Water : Aqwise
Huge potential for future cooperation(2):
Hightech Start-Up company
<Korea>
• Globally Competitive Value Chains
- Semiconductor, Display, Shipbuilding etc
• Advanced ICT
- Established IT & Telecom Infrastructure
- Strong government support
<Israel>
• Strong technological base - Highest R&D ratio to GDP
: 4.5%(1st)
- Highest Venture capital ration per person
- invention of pioneering technology : Disk-on-Key Instant Messaging/
Internet Telephony etc
• Proven technologies but lack of capital and marketing Know-how
G20 Seoul Summit (1) : Member States
G7 : USA, France, UK, Germany, Japan, Italy, Canada 4 Asian Countries : ROK, China, India, Indonesia
3 Latin America : Argentina, Brazil, Mexico
4 European countries : Russia, Turkey, Austrailia, EU Chair South Africa, Saudi Arabia
G20 Seoul Summit (2) : Results
• Market-determined Exchange Rate System
• Current Account Imbalance at Sustainable level
Indicative Guideline to be discussed in the first half of 2011
• A Modernized IMF
Greater representation of dynamic emerging markets and developing countries
• Strengthening of Global Financial Safety Nets
• Impact on Israel Economy
Quiz Contest On Korea
Preliminary phase:
Haifa University, Hamizpor hall, Eshkol building, 30th floor Tuesday, November 16th , 2010, 17:30 hrs Tel-Aviv University, Hall 326, Gilman Building Wednesday, November 17th, 2010, 18:00hrs Hebrew University of Jerusalem, 100 Auditorium Thursday, November 18th, 2010, 12:00 hrs Korean Culture Centre in Jerusalem Monday, November 15th 2010, 19:00hrs
Final Phase:
Hebrew University of Jerusalem Tuesday, November 30th, 2010, 18:00 hrs
Valuable awards For Winners Valuable awards For Winners Valuable awards For Winners Valuable awards For Winners