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Al-Ahram Weekly 8 - 14 April 1999 Issue No. 424 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 8 - 14 April 1999 Issue No. 424
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Focus Profile Features Travel Living Sports People Time Out Chronicles Cartoons Letters Seoul mates
By Ibrahim Nafie
President Mubarak's visit to South Korea is intended to explore the opportunities for promoting economic cooperation and to seek ways in which Egypt can benefit from South Korea's experience in low-cost modern technological production. Given that South Korea has spent the past two years in the throes of a severe economic crisis, however, do the opportunities for closer cooperation actually exist? Can South Korea contribute to Egypt's development efforts? Or can South Korea use the help of other countries to overcome its current predicament?
Crises notwithstanding, South Korea has produced an economic miracle relying upon its own capacities. It has highly trained and skilled experts, well adapted to the use of the latest technologies, and a broad and diversified industrial base. From the outset, it was clear that South Korea was intent upon developing an export-oriented economy. While such an orientation can stimulate economic growth, however, it is also vulnerable to fluctuations in external demand.
The South Korean crisis was the product of a number of structural and political factors. Specifically, corruption and politically motivated government intervention in banking operations to direct investment into real estate speculation generated fragile, random development. With investment diverted away from production, South Korean industries began to lose their competitive edge. The trend was exacerbated by mismanagement as a result of the tendency of South Korea's huge conglomerates to shoot out tentacles into anomalous activities, bringing a loss of central control and financial transparency.
Signs of impending economic disaster began to appear in 1995, when growth rates began to drop, unemployment rates rose, the deficit in the balance of payments increased, and the net profits of most of the largest industrial firms shrank. The crisis culminated in 1997 with the collapse of the won. Foreign capital fled en masse. In late 1997, the government was forced to turn to the IMF for a bailout loan. A $57 billion loan was arranged to revive the South Korean economy.
The reform programme was given a degree of impetus by the arrival of Kim Chong-pil to power in 1998. His government instituted financial and fiscal austerity measures including reductions in military expenditures, legislation to restructure the financial sector and greater autonomy for the central bank. A timetable was also drawn up for customs deregulation. Already, there are signs that the reforms are paying off. National currency reserves have climbed to $5 billion, and it is anticipated that the GDP growth rate for 1999 will rise to between two and four per cent.
Clearly, then, South Korea still has a vigorous economy that can interact favourably with that of Egypt. South Korean investments in Egypt currently total $1.4 million, and ambitious plans exist to augment the level of investment. Trade exchange relations between Egypt and South Korea are also healthy and dynamic. Egypt exports to South Korea include crude petroleum, raw and spun cotton, scrap copper and aluminium, furniture, carpets, fabrics and handicrafts, while its imports feature South Korean cars, automotive spare parts, electricity generating equipment, minibuses, tyres, household equipment, watches and construction equipment.
South Korea is also a partner in the new technological/industrial project in Ismailia, and the steelworks in Alexandria. Although these joint venture agreements were signed several years ago, implementation was stalled by South Korea's economic crisis. Now, not only is it anticipated that work on these projects can begin soon, it is also hoped that the two countries will be able to embark on other such joint ventures. Indeed, studies are already underway for several cooperative projects, such as upgrading the Ameriya Spinning and Weaving Company, producing generated and renewable energy and manufacturing electricity converters in Egypt.
South Korean officials have announced that they want to contribute to the growth and development of Egyptian industry in order to prepare it to compete powerfully in the international market of the 21st century. But cooperation between Egypt and South Korea extends beyond the economic domain. Egyptian scientific and academic organisations are showing increasing eagerness to exchange expertise with their South Korean counterparts. In this respect, the Centre for Asian Studies at Cairo University's College of Economics and Political Science and the Institute for Middle Eastern and African Studies in South Korea have agreed to host a regular series of seminars and conferences, to be held in Cairo and Seoul. These forums will contribute greatly to enhancing mutual understanding and to creating the channels and mechanisms necessary to broaden the realm of mutual cooperation. The host parties also envision developing a database on all aspects of Egyptian-South Korean relations, which will be of great value to policy-makers and academics in both countries. Several conferences have already been held, enabling work on the database to begin.
If Egypt and South Korea have explored avenues and built upon opportunities for closer cooperation in a variety of fields over the past years, the realm of economics is still the most crucial to Egyptian-South Korean relations. This is why both sides have been intent upon enhancing the prospects for future economic cooperation. President Mubarak's visit to South Korea crowns a series of important developments in the relations between the two countries, and reflects Egypt's steadily growing interest in developing relations with South Korea.
The preliminary groundwork for the president's visit to South Korea was laid some time ago, when Egyptian technical delegations met with their South Korean counterparts. Then, in March, a South Korean delegation, comprising senior officials in the South Korean Ministry of Commerce, Industry and Energy as well as representatives of the major South Korean conglomerates made an extensive visit to Egypt. In February, South Korean Prime Minister Kim Chong-pil held talks with Egyptian officials in order to promote investment and trade cooperation between the two countries. As Mubarak visits Seoul, the stage is set for closer economic partnership.
