"Middle East, Promising Cooperation with Korea in Future Energy, Electric Vehicles, and Defense"

Seoul Jung-gu Korea Chamber of Commerce and Industry. / Photo by Jinhyung Kang aymsdream@

President Yoon Suk-yeol has embarked on a tour of Saudi Arabia and Qatar with a large economic delegation, and an analysis suggests that there is significant potential for cooperation between South Korea and the so-called 'Middle East Big 3'?Saudi Arabia, the United Arab Emirates (UAE), and Qatar?in the fields of future energy, electric vehicles, and defense industries.

According to the 'Research Report on Economic Cooperation Tasks with Major Middle Eastern Countries' published by the Korea Chamber of Commerce and Industry (KCCI) on the 22nd, trade volume between South Korea and these three countries increased by 61.6% last year compared to 2019, just before the COVID-19 pandemic, significantly surpassing South Korea's global trade growth rate of 35.3% during the same period. The growth rates by country were 82.1% for Saudi Arabia, 56.2% for the UAE, and 27.6% for Qatar.

Regarding imports, crude oil accounted for the largest share from Saudi Arabia and the UAE at 90.4% and 59.5%, respectively, while natural gas made up the largest portion from Qatar at 51.3%. As for exports, major items were automobiles (25.5%) to Saudi Arabia, automobile parts (8.5%) to the UAE, and steel pipes (20.7%) to Qatar.

The KCCI identified future energy, electric vehicles, and defense as promising sectors for cooperation with these countries. All three nations are strongly promoting future energy industries such as solar power and hydrogen through state-led initiatives. Saudi Arabia has established the National Renewable Energy Program (NREP), aiming to replace 50% of national development energy demand with renewable energy by 2030. The UAE announced its 'Energy Strategy 2050,' targeting an increase in renewable energy generation to 44% by 2050. Qatar has set a goal to replace 20% of its total electricity demand with renewable energy by 2030.

Aligned with the global trend toward electrification, the electric vehicle market is also expected to expand. Saudi Arabia aims to produce 500,000 electric vehicles annually by 2030 and convert more than 30% of vehicles in its capital, Riyadh, to electric vehicles, expanding investments and cooperation to build a domestic electric vehicle supply chain. Qatar has initiated infrastructure development with a goal of achieving a 10% electric vehicle adoption rate by 2030, and the UAE has seen a sharp growth in electric vehicle imports, increasing approximately 13-fold from $100 million in 2019 to $1.39 billion last year.

In July, Hyundai Kefico, a subsidiary of Hyundai Motor Group, signed a parts supply contract worth about 700 billion KRW with Saudi electric vehicle manufacturer Ceer, indicating these countries' interest in South Korea's automotive technology.

The KCCI also observed ample potential for expanding cooperation in the defense sector. The Middle East is frequently affected by conflicts and disputes such as the Israel-Palestine and Sunni-Shia tensions, and with abundant oil wealth, it is considered the world's largest arms-importing region. According to the Stockholm International Peace Research Institute (SIPRI), Saudi Arabia ranked second, Qatar third, and the UAE tenth among global arms importers over the past five years.

Kim Moon-tae, head of the Industrial Policy Team at KCCI, said, "The three Middle Eastern countries are actively seeking new growth engines to prepare for the post-oil era. Since South Korea has competitiveness in future industries such as advanced manufacturing, we expect this tour to expand opportunities for our companies to enter local markets."