Korea courts big business in Iran

The government and Korean companies have taken the first steps to capture new business opportunities in Iran, which has emerged as the “promised land” of possibilities since economic sanctions were lifted.

According to the Ministry of Trade, Industry and Energy on Monday, Minister Joo Hyung-hwan met with a number of Iranian government officials on Sunday and discussed ways to strengthen economic cooperation for the first time in 10 years.

Joo met Iranian Finance Minister Ali Tayebnia, Iran Central Bank Gov. Valiollah Seif, Roads and Urban Development Minister Abbas Akhoundi and other prominent decision-makers in Tehran.

“I hope to strengthen the partnership in infrastructure and social overhead capital,” Joo said. “We hope Korea will become Iran’s precious business partner.”

He said he will try to improve ties between the two countries to form long-term relationships instead of just focusing on short-term goals.

Specifically, Joo and Iranian ministers discussed financial and economic cooperation and infrastructure projects involving railroads and harbor facilities.

In his meeting with Seif, Joo asked the Iranian government to slow down its withdrawal of deposits in Korean banks. When some of the sanctions were lifted earlier the year, Iran considered withdrawing money from Korea. The money has been frozen in Korean institutions for the past five years since Iran’s assets were frozen as part of imposed sanctions.

Joo and Seif also discussed establishing a credit limit for loans of about $200 million. The two countries signed a basic agreement to create 5 billion euros ($5.5 billion) worth of trade insurance for projects designated by the Iranian government. These funds will be financed by the Export-Import Bank of Korea and other financial institutions, the Korean Trade Ministry said.

Joo also asked for Iranian government support on road and railway construction projects worth $4.9 billion, which would allow Korean companies to get involved in the future.

Joo said the Export-Import Bank of Korea will resume providing an Economic Development Cooperation Fund to Iran this year.

“Korea and Iran should not only focus on short-run outcomes like temporary increases in trade volume,” said Joo, who attended the Korea-Iran Forum banquet with entrepreneurs and government officials from both countries. “Instead, we really want to build a genuine, long-term partnership toward shared prosperity through comprehensive cooperation in social, cultural and economic domains.

“Taking advantage of Korea’s strong manufacturing base, cutting-edge information and communications technology, and well-educated human resources, Korea will help Iran build more sophisticated industrial bases.”

Along with government officials, a number of Korean businesses expressed plans to reach their goals in the Middle East.

Posco, Korea’s largest steelmaker, looks close to making headway in Iran since the country has plans to increase its crude steel production from 16.11 million tons to 55 million tons in the future.

Lee Hoo-geun, an executive of Posco, has signed a memorandum of understanding with Iran’s steel company, Pars Kohan Diar Parsian Steel (PKP), to jointly build an integrated steel mill with a total production capacity of 1.6 million tons per year.

Posco Energy also signed a memorandum of understanding with PKP to build a gas power plant in cooperation with the Korea Electric Power Corporation, while Posco E&C also signed a memorandum of understanding with the Iranian company to carry out a water conversion business.

SK Group sent two high-ranking executives to Iran. SK Networks President & CEO Moon Jong-hoon and SK Energy CEO Kim Joon met with Bijan Namdar Zanganeh, Iran’s petroleum minister, last week.

Since Feb. 23, Moon has been touring Europe, Iran, Saudi Arabia and the United Arab Emirates to find new business partners. Kim is considering establishing a branch of SK Energy in Iran.

“This is an opportunity that can create synergy between Iran and SK Group,” Moon said. “We strongly believe that the partnership with Iranian companies can get much stronger at this time, as the two sides have 30 years of history.”

Samsung, the nation’s No. 1 conglomerate, is also looking for an opportunity in Iran. The company sent Park Sang-jin, president of Samsung Electronics, and Park Joo-won, president of Samsung Engineering. Samsung C&T sent executive Lee Beom-soon, while Samsung Heavy Industries sent executive Chung Joong-hyun.

Lee met with Iranian businesses to launch a project involving the construction of harbors, roads, bridges, hospitals and infrastructure necessary to build up an electronic information system. Chung met with executives from Iran’s state-run Islamic Republic of Iran Shipping Lines to discuss the sale of vessels.

Other Korean businesses, such as Hyundai Heavy Industries and Hyundai Oilbank, are also trying to strengthen their access to Iran to import more Iranian crude oil and win more contracts to sell ships.

Doosan Heavy Industries recently held a showcase in Iran to target the water conversion market with its affiliates overseas, including Doosan Skoda Power.

“Iran is a huge market that will help us break through the slumping economy and low international oil prices,” said Kim Heon-tak, a vice president of Doosan Heavy Industries. “We will try to find an opportunity in the water conversion business with our industry-leading technology.”

BY KWON SANG-SOO, KIM YOUNG-NAM [kwon.sangsoo@joongang.co.kr]