South Korea will provide comprehensive financial support to local companies wanting to enter the Iranian market, the trade and industry minister said Friday.
Seoul joined other countries in lifting sanctions against Iran last month after the landmark nuclear accord reached in July 2015 went into effect. It obliges Tehran to convert and reduce its nuclear facilities and accept outside inspections in exchange for the lifting of blanket economic sanctions and unlocking of frozen assets.
"Government-wide assistance will be offered so businesses can gain access to the resource-rich country," Minister of Trade, Industry and Energy Joo Hyung-hwan said in a meeting with senior executives from Hyundai Motor Co., LG Electronics Inc., Daelim Industrial Co. and other companies planning to do business in Iran.
He said a ministerial-level meeting is planned for Feb. 29, with a high-ranking economic delegation to be sent to the country to open new business ties.
Local companies said that with the lifting of sanctions, Iran's economy could grow 5.8 percent in 2016 and 6.7 percent next year, while access to frozen funds totaling some $100 billion could spur fresh investment in energy infrastructure and social overhead capital projects. This translates into more business opportunities for South Korean companies.
"To promote trade and investment, Seoul is committed to maintaining the current Korean-won based settlement of accounts system while adding other forms of exchange using different foreign currencies," he said. "The euro and Japanese yen can be used in tandem with the won to settle accounts."
Joo also said that actions will be taken to set up a financial support system that can help South Korean companies win orders in Iran. He said a creating a tied loan arrangement is being examined which could foster closer financial cooperation.
He said that the government will provide information about Iran that can make it easier for local companies to expand into the market.
To expand bilateral trade, South Korean companies should set up joint ventures and reach technical transfer deals in such areas as autos, petrochemicals and steel. Construction and plant building also has growth potential, he stressed.
"If headway is made, South Korean exports, including parts and components, will increase and benefit companies," he said.
The boost will be welcome news for Asia's fourth-largest economy whose exports nosedived 18.5 percent in January.
He added that local companies may also be able to make headway in such areas as consumer electronics and cosmetics. (Yonhap)