Cairo and Seoul are busy working on a host of economic cooperation agreements in various sectors that will benefit both sides on the heels of South Korean President Moon Jae-in’s visit to Cairo last week, the first by a South Korean president to Egypt in 16 years.
During the visit, President Abdel-Fattah Al-Sisi and his South Korean counterpart agreed to sign a free-trade agreement between the two countries, South Korea’s first with an African country.
Al-Sisi and Moon discussed electric-car manufacturing in Egypt, in addition to cooperation in the fields of communication, tourism, mining, and security. South Korea may also take part in the presidential Decent Life Initiative aiming at improving the livelihoods of Egypt’s poor, according to a statement by the presidency.
The two countries signed a development financing agreement worth $251.6 million to develop and modernise the signalling systems of the Luxor-High Dam railway, read a statement by the Ministry of International Cooperation.
In addition, the Korea International Cooperation Agency will give Egypt a $7.9 million development grant to establish an e-procurement system, enhance its human resource capabilities, and provide technical support for the management and operation of the new system.
South Korea is set to provide Egypt with $1 billion in soft loans over the next five years to finance construction and infrastructure projects, including transportation and water infrastructure, according to a memorandum of understanding Al-Sisi and Moon signed during the visit.
The Ministry of International Cooperation said in a statement that the funding provided by the Korea Economic Development Cooperation Fund would also be used to finance new and renewable energy projects.
The two countries also signed a cooperation agreement in the fields of archaeological sites, restoration, and museum management, including the use of technology and combating the illicit trade in antiquities. Cooperation between the two sides will begin with restoration work at Luxor’s Ramesseum, the memorial temple of the Pharaoh Ramses II.
The cumulative value of Korean investments in Egypt is more than $700 million in 181 projects in different fields, especially in electronic products, information technology, the textile industry, auto spare parts, chemicals, building materials, renewable energy, construction, shipping, and transportation.
According to the Egyptian cabinet, there are 33 Korean companies operating in Egypt including Samsung, LG, DI Dong Il Corporation for the Manufacturing and Distribution of Cotton Yarns, Tex Chem, Mobis for Car Parts, GS Engineering & Construction, SK Engineering & Construction, and Doosan Heavy Industries & Construction.
Data released by the Central Agency for Public Mobilisation and Statistics (CAPMAS) show that trade between Egypt and South Korea increased to $1.9 billion during the first 10 months of 2021, up from $1.6 billion during the same period in 2020, registering a 23.6 per cent increase.
Egypt’s imports from South Korea increased to $1.4 billion during the first 10 months of 2021, up from $938 million during the same period in 2020, recording an increase of 44.8 per cent.
However, Egyptian exports to South Korea decreased to $560.2 million during the first 10 months of 2021, down from $613.5 million during the same period in 2020, registering a decrease of 9.5 per cent.
Egypt exports fuel and mineral oils, chemical products, animal food, stone and cement to South Korea and imports machines and electrical appliances, cars, tractors, and bicycles.
Ahmed Zaki Al-Gabbas, a member of the Egyptian-South Korean Business Council, said Egypt could benefit from South Korea’s expertise in the fields of chemicals and automobiles, adding that Egypt could increase its exports of crops and leather to South Korea.
As for the planned free-trade agreement, Al-Gabbas said the deal may help Egypt to benefit from South Korean technology in the fields of automobiles and electrical appliances.
Khaled Nosseir, chair of the Egyptian-South Korean Business Council, said that an agreement on economic and trade integration between the two countries would increase Egyptian exports, maximise benefits for Egypt, and raise the competitiveness of Egyptian products.
He added that South Korea is a strategic partner for Egypt in the auto industry.
Ali Eissa, head of the Egyptian Businessmen’s Association, said Egypt should study carefully whether it will benefit from signing a free-trade agreement with South Korea, since it may sacrifice the value of the customs duties it currently receives, especially since Egypt’s imports from South Korea far exceed its exports to it.
According to Eissa, the agreement will not benefit the agricultural exports sector, which is based on deals with the private sector. He said that South Korea insists that its own quarantine protocols be followed on imports, a very costly operation if large quantities are not exported.
However, a free-trade agreement between Egypt and South Korea may reflect positively on the automobile industry since South Korean car components manufactured in Egypt would be exported without paying customs duties, he said.
*A version of this article appears in print in the 27 January, 2022 edition of Al-Ahram Weekly.