between Korea and Israel between Korea and Israel

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

4^th highest R&D investment per GDP

(2.6% in Korea, compared to 4.5% in Israel)

Human Resources

26^th largest population (48 million)

Highest ratio of college degrees per capita (56% in Korea, OECD

average is 34%; 2007)

Economy

15^th largest GDP (832 billion USD)

9^th 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 1^st globally in terms of new orders(40%) and volume of vessels built(37%) of all orders worldwide.

World’s 5^th 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 15^th economy, Israel 27^th 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

largest export destination

 Major exports : passenger cars, cellular phones, PCs/laptops, plastics

Korea is Israel’s 15^th largest export destination

• Israel is Korea’s 44

largest importing country

 Major imports : electronic machinery, optical measuring&checking instruments, organic chemicals

Korea is Israel’s 14^th 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

•

Israeli Companies in Korea :

Tourist 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%(1^st)

- 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, 30^th floor Tuesday, November 16^th , 2010, 17:30 hrs Tel-Aviv University, Hall 326, Gilman Building Wednesday, November 17^th, 2010, 18:00hrs Hebrew University of Jerusalem, 100 Auditorium Thursday, November 18^th, 2010, 12:00 hrs Korean Culture Centre in Jerusalem Monday, November 15^th 2010, 19:00hrs

Final Phase:

Hebrew University of Jerusalem Tuesday, November 30^th, 2010, 18:00 hrs

Valuable awards For Winners Valuable awards For Winners Valuable awards For Winners Valuable awards For Winners

1111

Prize Prize Prize Prize –––– _{Notebook Notebook Notebook Notebook}

+ Scholarship + Scholarship + Scholarship + Scholarship

+ Trip to Korea + Trip to Korea + Trip to Korea + Trip to Korea

2222

Prize Prize Prize Prize –––– _{Notebook Notebook Notebook Notebook}

+ Scholarship + Scholarship + Scholarship + Scholarship

3333

Prize Prize Prize Prize –––– _{Notebook Notebook Notebook Notebook}