2016-06-30 | Business

S. Korean businesses invest in Uzbekistan

By Maksim Yeniseyev

Uzbekistan has a special relationship with S. Korea that continues to pay dividends.

Korean Prime Minister Hwang Kyo-ahn and Uzbekistani President Islam Karimov shake hands in Tashkent May 20. [Karimov press office photo obtained by Maksim Yeniseyev]

TASHKENT -- Uzbekistan's special relationship with South Korea, which stems from a twist of Soviet history, is helping the Central Asian country advance in business and technology.

Recent developments include the May 16 decision by Tashkent to sell more than US $250m (735.9 billion UZS) in shares of strategic industrial assets to Korean investors.

Already, Korean businesses have invested more than US $7 billion (20.6 trillion UZS) in the Uzbekistani economy since 1991, when the Central Asian state attained independence.

A special relationship rooted in history

Besides trade, the countries are cultivating political and cultural ties. South Korean Prime Minister Hwang Kyo-ahn May 19 paid an official visit to Uzbekistan, during which he discussed strategic projects of the two countries.

The affinity of Uzbekistan and South Korea dates back to an act by Soviet dictator Joseph Stalin, Tashkent political scientist Valerii Khan, an ethnic Korean, told Central Asia Online.

"The Korean diaspora is one of the largest in Uzbekistan," Khan said. "In the 1930s, the Soviet government [expecting war with Japan] forcibly moved more than 100,000 ethnic Koreans from the Soviet Far East to Central Asia."

Even now, 25 years after the end of the USSR, with ethnic Koreans free to emigrate if they want, "almost 185,000 Uzbekistanis counted themselves as Korean in the 2013 census", Khan pointed out.

Ethnic Koreans participate fully in Uzbekistani political and business life, Khan said, noting, "They serve in parliament ... and manage major state-owned and private firms."

Given Uzbekistan's long history of accommodating an ethnic Korean minority, it was no surprise when South Korea turned out to be one of the first countries to recognise its independence in 1991. Ever since then, the two states have furthered their relations.

Trade shoots up

Uzbekistan's resource riches and South Korea's hi-tech expertise made the countries apt partners.

"In 2006, the countries signed a Joint Declaration on Strategic Partnership," Uzbekistani Foreign Ministry spokeswoman Farida Umarova told Central Asia Online. "Since 1991, trade has grown 540-fold to $1.7 billion [50 trillion UZS] per year."

Uzbekistan has 408 South Korean businesses operating on its territory, she added.

"Uzbekistan is the Republic of Korea's top trading partner in Central Asia," Hwang said in Tashkent May 20 during a conference with Uzbekistani counterpart Shavkat Mirziyoyev. He described South Korea as Uzbekistan's "unfailing friend".

High investment, with more to come

Since 1991, South Korean investment in the Uzbekistani economy already has exceeded US $7 billion (20.6 trillion UZS), according to Tashkent.

Even more investment is coming: Uzbekistani President Islam Karimov May 16 decided to allow Korean investors to buy shares in large firms from the Uzbekistani government. The decision is part of a multi-step privatisation programme.

During the course of 2016-2017, Korean firms plan to buy shares in Samarkand Winery, Sarbon-Neftegaz (Sarbon Oil and Gas) and a number of large banks. Those transactions are expected to exceed US $250m (735.9 billion UZS) in value.

Korean leaders April 29 in Seoul, during an Uzbekistani-Korean conference, agreed to purchase shares in those enterprises, Abdullo Kakhkhorov, a spokesman for the Uzbekistani Foreign Economic Relations, Investments and Trade Ministry, told Central Asia Online.

In more evidence of the strength of Uzbekistani-Korean ties, Hwang -- during his visit to Uzbekistan -- attended the May 21 grand opening of the Ustyurt gas chemical complex in Karakalpakstan.

Three major Korean corporations were involved in the four-year-long construction of the plant, which cost more than US $4 billion (11.8 trillion UZS).

The plant, the largest of its kind in Central Asia, will be able to produce 4.5 billion cubic metres of natural gas annually, as well as various amounts of other hydro-carbons, Kakhkhorov said.

Other massive Uzbekistani-Korean joint ventures are under way, Kakhkhorov said.

In addition, to strengthen the countries' ties, Uzbekistani workers May 20 began building the House of Korean Culture and Art in Tashkent. Karimov decided to build the centre as a sign of the countries' friendship.

"The building will be complete in 2017," Umarova said.

"Our government highly appreciates the spirit of inter-ethnic harmony prevailing in Uzbekistan," Hwang said at the ground-breaking for the building.

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