Abu Dhabi Investment Company, Korea Development Bank (KDB) and the Korea Trade Promotion Agency (KOTRA) signed a cooperation deal on Friday to help increase investment flows between South Korea and the Middle East andNorth Africa region.
The agreement lays the groundwork for cooperation in many areas, including cross-border mergers and acquisitions, and private equity, infrastructure and portfolio equity investment. It was sealed during a visit to Seoul by a trade delegation from the United Arab Emirates, led by His Excellency Nasser Ahmad Khalifa Al Suwaidi, chairman of Abu Dhabi's Department of Economic Development and vice chairman of Abu Dhabi Investment Company.
"Investment funds in the Middle East are diversifying to include direct investments in Asia and Korea in particular," said Cho Hwan Eik, president of KOTRA. "Through this MOU, we expect investment flows between Korea and Abu Dhabi to increase significantly."
South Korea is one of the most active countries in Asia in attracting foreign investment. The South Korean government hopes to boost foreign direct investment by 7 percent this year to $12.5 billion, with special Free Economic Zones at the forefront of its strategy.
Meanwhile, the Middle East and North Africa (MENA) region is on a drive to build new infrastructure to support its fast diversifying economies, with at least $410 billion worth of investment planned in the next decade, according to independent research commissioned by Abu Dhabi Investment Company. "This is an important step, which should lead to some exciting investment opportunities both in South Korea and the MENA region," said Nazem Fawwaz Al Kudsi, chief executive of Abu Dhabi Investment Company. "The Middle East should not just be regarded as a source of capital but also as an investment destination," al Kudsi added.
Although many MENA region governments are spending revenues from oil and gas on new road, ports and power projects, they are also keen for private investors to bring their expertise.
Abu Dhabi Investment Company also expects private equity and M&A opportunities, as family-run companies reshuffle their assets and look for new investment partners. For South Korea, 2008 was a banner year for foreign direct investment with US$11.71 billion in notifications. Key to the government's strategy is promoting Korean assets to global investors to take advantage of the devaluation of the won against the U.S. dollar, Canadian dollar, and the Japanese yen.
Korea's Free Economic Zones, now numbering six, offer a generous array of incentives, and are a central plank in the country's drive to attract investment.
Abu Dhabi Investment Company, created in 1977 to invest on behalf of the Abu Dhabi government, is now also offering global institutional investors funds focused on the Middle East and North Africa (MENA) and investment banking services.