Korea emerges as top trade partner of Kuwait
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Grand Mosque is the largest mosque in the State of Kuwait. / Courtesy of Embassy of Kuwait
Korea and Kuwait established diplomatic relations at an ambassadorial level in June 1979. Their friendly bilateral relations in the fields of politics, trade, economy and culture have developed steadily ever since.
Kuwait is situated in the northeast corner of the Arabian Peninsula, bordered by the Republic of Iraq to the north and the Kingdom of Saudi Arabia to the south and west. It also shares a maritime border with the Islamic Republic of Iran.
Kuwait covers an area of 18,000 square kilometers, which is one-fifth the size of South Korea, and is home to a population of about 3.9 million, including approximately 1.56 million Kuwaiti nationals.
As a member of the Gulf Cooperation Council (GCC), Kuwait has a geographically small yet wealthy and relatively open economy dominated by oil and gas production.
Kuwait is the fourth-largest economy in the GCC, with a nominal gross domestic product (GDP) of $181.6 billion and a per capita GDP of $53,000 in 2013.
Oil and petroleum account for 64 percent of the gross domestic product (GDP), 95 percent of export revenues and 80 percent of government income.
Looking ahead, real GDP growth is expected to remain resilient at over 4 percent in 2014, driven by expansion in government expenditures, oil production and exports, boosting the GDP to $184 billion.
According to OPEC’s official figures, Kuwait has the sixth-largest oil reserves in the world, estimated at 104 billion barrels, nearly 6 percent of total global reserves, and it is the world’s seventh -richest country per capita.
In his speech at the Fifth Asian Ministerial Energy Roundtable Meeting in Seoul in September 2013, Kuwaiti Deputy Minister and Minister of Oil Mustafa Al-Shamali reaffirmed Kuwait’s commitment to reaching an oil production target of 4 million barrels per day (bpd) by 2020, which would help ensure stable crude oil supply to Asia. Currently Kuwait’s daily output of oil has exceeded 3 million bpd.
Trade
The trade relationship between Korea and Kuwait is substantial, with strong potential for further expansion in a broad range of areas no longer limited to crude oil trading.
Kuwait is eager to increase the level of bilateral, mutually beneficial cooperation. In recent years, state-run Kuwait Petroleum Corporation and Kuwait Oil Tanker Co. have established a presence in Korea.
The trade volume between the two countries continues to rise. It amounted to $20 billion in 2012.
Kuwait exports reached $115.46 billion for 2013, mainly including oil, refined products and fertilizers.
Kuwait’s top export partners include South Korea (16 percent), along with India (15.7), Japan (13.4), the U.S. (11.7) and China (9.2).
On the other hand, imports reached $36.54 billion and most of imported items are food, construction materials, clothing, vehicles and parts. Top imports partners were the U.S. (11.8 percent), China (9.2), Saudi Arabia (8.3), Japan (8.2), South Korea (7.0) and India (4.6).
In 2010, Kuwait passed a historic and ambitious agenda called the Kuwait Development Plan, pledging to spend up to $130 billion over five years. The new plan aims to turn Kuwait into a regional trade and financial hub through economic diversification and modernizing Kuwait’s state infrastructure, as well as bolstering private-sector partnerships.
The plan to diversify its oil-reliant economy and modernize the country includes boosting crude and gas production, building a metro and rail network, new hospitals, roads, power stations and expanding the airport, along with facilitating long-awaited projects such as the multi-billion dollar Silk City project, Boubyan Port and the Subiya Causeway.
The Kuwait Development Plan seeks the active participation of the private sector through public private partnerships (PPP) to jumpstart the development of the mentioned projects.
There is a considerable scope for Korea and Kuwait to develop further their bilateral commercial relationship in both oil and non-oil sectors.
The opportunities are enhanced by the implementation of the Kuwait Development Plan in 2014, representing significant potential for Korean companies, as demonstrated already in the case this month where Korean companies have secured multi-billion-dollar oil refinery and petrochemical plant projects in Kuwait.