Prime Minister's Seoul visit to boost trade and investment

Ambassador Vishnu Prakash

Economic Times – 22 March 2012

What does one call a demoralized, dirt-poor and war-devastated nation 60 years hence? What lies in store for a resource deficient country, with a per capita income of mere $87 in 1962? The answer is South Korea, now an OECD nation with per capita of $23,000.

It is hard to believe that this lush green nation with 65% of forest cover was nearly denuded by war and hunger by 1953. It was dismissed as a 'basket case'. The battered nation also suffered from a complex because of being 'sandwiched' between two civilizational giants - China and Japan - who laid claims to it at various points in time.

The transformation was wrought by visionary but dictatorial and even controversial leaders like the first President Syngman Rhee, and the architect of modern Korea, President Park Chung Hee. The latter wrested power through a coup in May 1961 and ruled with an iron hand, until his assassination in 1979.

Early on the leadership realized that the country's salvation lay in education, connectivity and industrialization. In the initial years, as much as 19% of national budget was earmarked for education. In the quest for development and assistance, President Park in 1965 boldly normalized relations even with Japan, its erstwhile 'oppressive' colonial master, despite fierce domestic opposition.

He unleashed a wave of industrialization and laid the foundation of present-day Chaebols (conglomerates). Next he steamrolled all opposition to construct the 428-km long Seoul - Busan highway, ahead of schedule in 27 months flat, at an astronomical cost of Won 42.9 billion (23.6 percent of national budget in 1967). To his detractors, who were many, his response was 'just spit on my grave'. The security umbrella of USA and its generous economic assistance to ROK, in the early years was also a key factor in nation building.

Korea today has Chaebols like Samsung, which has even been termed a 'Republic' given its turnover of $ 300 billion. One of the fastest growing OCED countries, ROK is now the 9th biggest trading nation ($1.08 trillion in 2011), and the 15th largest economy, with a GDP of $ 1.164 trillion. Its leading business partners are China, Japan and USA.

Not unexpectedly, trade and investments constitute the core of rapidly expanding India-RoK ties. Corporate Korea is attracted to the opportunities presented by India's huge market, rapid GDP growth and IT prowess. The Comprehensive Economic Partnership Agreement (CEPA), operationalised on 1st January 2010, triggered a 70% surge in bilateral trade that crossed $20.5 billion in 2011. The target of $30 billion by 2014 is easily attainable. India does face a consistent deficit though and has been seeking greater access for its IT enabled services, as well as, pharmaceutical and agricultural products such as mango, walnut and grapes.

Indian companies led by TATA, Hindalco and Mahindra & Mahindra (M&M) have made investments of over $ 1 billion in ROK. M&M acquired the ailing Ssangyong Motors, the 4th largest Korean car maker in 2010, and is busy nurturing it back to health.
South Korean companies have invested more than $2.3 billion in India and are actively planning to scale up. Hyundai Motors for example produces some 600,000 vehicles in Chennai and exports half of them. Samsung Electronics generated revenues of more than $2 billion last year and employs 6000 Indian engineers in its R&D facility in Bangalore, which is the largest outside Korea.

Cash and experience rich, Korean construction companies like Samsung and Hyundai have successfully executed infrastructure projects abroad, including construction of the iconic Burj Dubai and Petronas Tower in Malaysia. They are slowly getting aware of India's ambitious infrastructure development plans. Their active involvement in India, would bring-in best practices, technology and competition. Hyundai Rotem Korea, for example, provided technology to Bharat Earth Movers Limited and has been supplying world class rolling stock and coaches for Delhi and Bangalore Metros.

Democratic underpinning and a broad convergence of interests in our regions and beyond, has led to ties expanding into security, defense, education, scientific, space, cultural and tourism spheres. Last year a bilateral civil nuclear cooperation agreement was concluded. Over 2000 Korean students (half of them school going) are studying English, IT and management in India, while some 900 Indian students now study science subjects in Korean universities. English teachers in ROK are beginning to make their mark. Korean parents have a certain comfort level with their kids studying in India. The first Indian 'Education Fair' near Seoul organized last month, by AFAIRS Exhibitions and Media was quite successful.

Our cultural contacts have dated back millennia. Legend has it that Princess Suriratna from Ayodhya came to Korea and married King Kim-Suro to become Queen Hur Hwangok in 48 AD. Some 10% of Koreans bearing the surname 'Kim' trace back their ancestry to her. India is also seen as their spiritual home by its over 25% Buddhist population. The move to open Indian Cultural Centre in Seoul last April has been well received.

A Strategic Partnership was forged between both countries during the landmark visit of President Lee Myung-bak to India in January 2010. He has been a votary of strong India-RoK relations. Prime Minister Dr. Manmohan Singh and he enjoy a warm relationship of mutual respect.

The forthcoming visit of our Prime Minister to the 'Miracle on the River Han' should further boost our robust bilateral engagement. He will also participate in the second Nuclear Security Summit in Seoul on 26-27 March 2012.

(The author is Ambassador of India to South Korea)