South Korea to boost Uzbekistan's construction industry
Published on 05/06/2015
After a successful summit between the two nations, South Korea has agreed to cooperate with a number of projects in Uzbekistan over the next five years. In total, around $7.7 billion worth of Korean investment is planned, with the aim of laying the groundwork for future construction projects in a range of sectors.
South Korea and Uzbekistan already have a number of economic ties. More ethnic Koreans live in Uzbekistan than any other Central Asian nation, and the country is also South Korea's main trading partner in the region. In total, two-way trade between the countries reached a value of $1.9 billion in 2014.
However, the recent summit has boosted this and put more attention on the Uzbek construction industry. The agreements that the two nations signed will lead to increased cooperation in a range of fields, and will hopefully lead to more South Korean firms contributing to a variety of Uzbek construction projects.
The agreements
The summit was held in Seoul between Korean president Park Geun-hye and Uzbek president Islam Karimov, along with a number of other officials from both nations. This was preceded by a business summit, which was led by Uzbekistan's first deputy prime minister Rustam Azimov and Korean deputy prime minister Choi Kyung Hwan.
The nations agreed to a series of ties that will enable Uzbekistan to benefit from Korean technology and expertise, while Korea will be able to utilise Uzbekistan's natural resources. A joint statement released after the summit read: "The two sides agreed to push for large-scale cooperative projects in Uzbekistan's economy."
According to the statement, the aim of this is "to introduce advanced technology and attract direct investment from major South Korean companies". The money being spent on Uzbekistan is intended to pave the way for a number of large-scale construction projects that Korean firms hope to be able to work on.
Uzbek infrastructure
One of the main reasons for the summit, and the subsequent agreements signed by the two nations, is the amount of money Uzbekistan is planning on investing in its infrastructure over the next five years. In total, the nation's government intends to spend an average of $11 billion per annum in this period.
A large portion of this will be spent on transport, including several planned airports. However, a major use of the money will be to modernise Uzbek industry. This is an area in which South Korea believes it can contribute to in a big way, which looks set to provide a boost to the Uzbek construction industry.
For example, one of the first projects to be agreed on as a result of the summit is the creation of a plant to produce olefins - plastic products that are often used in the construction industry - from methanol. It is estimated that the value of this plant will be around $4.5 billion.
The deal for this project was signed by South Korea's GS Engineering & Construction and Uzbek national oil and gas company Uzbekneftegaz. Other agreed projects include an $820 million project to modernise several of Uzbekistan's Talimarjan thermal power plants, as well as the construction of around $2 billion worth of other power plants.
Korean companies have plenty of experience working in Uzbekistan, as over a dozen construction projects - worth more than $7 billion - have been won by Korean firms in the last few years. In the wake of this summit, it is expected that this will become more and more common.