Hong pitches joint investment with RussiaDeputy Prime Minister Hong Nam-ki suggested creating a joint investment fund with Russia to develop industrial materials and equipment, branching out to new countries as South Korea looks to reduce its reliance on Japanese imports amid deteriorated relations.
Hong, who doubles as finance minister, made the offer on Thursday in a meeting between South Korean and Russian industry officials and business representatives at the Eastern Economic Forum held in Vladivostok, Russia, explaining that the investment fund would benefit both countries.
“Financial support will be made for joint projects so that Russia will be able to secure overseas markets by commercializing its technology, while South Korea will be able to diversify its import supplies of materials, components and equipment,” said Hong.
The suggestion underscores the urgency of the government’s efforts to shift industrial reliance away from Japan as the two countries have recently become engulfed in a trade conflict.
Japan has strengthened export controls on materials used in semiconductor and display production - photoresists, hydrogen fluoride and fluorinated polyimide - since July. Tokyo also removed Seoul from its list of preferential trade partners, and South Korea has decided to take a similar measure.
In response, South Korea has focused on diversifying supply lines and making large-scale investments, committing 24.1 trillion won ($20 billion) to research and development in next year’s budget.
Russia could serve as an alternative supply source and has offered to supply South Korea its hydrogen fluoride through diplomatic channels during the early stages of the trade conflict.
The proposed investment fund between Korea and Russia also falls under efforts by the Moon Jae-in administration’s “New Northern Policy” that seeks to establish stronger economic cooperation in East Asia.
At the same forum in Russia two years ago, President Moon Jae-in announced the policy, outlining ambitions to build railroads and infrastructure that connects South Korea with the rest of the continent on the back of warmer relations with North Korea at the time.
According to the South Korean government, trade volume between the South and Russia’s Far East region doubled last year from 2016, and South Korea became the top trading partner for the region in the first half of this year.
While economic cooperation between South Korea and Far East Russia has increased, actual efforts to connect infrastructure have stalled as inter-Korean relations have worsened.
Moon was noticeably missing at this year’s forum, where Japan’s Prime Minister Shinzo Abe met with Russian President Vladimir Putin on Thursday.
Moon is currently visiting Laos as part of a trip to Southeast Asia this week.
BY CHAE YUN-HWAN [email@example.com]