Dubai’s Korea move

Last week Dubai's leading dignitaries jetted East to more temperate climes on a state visit to South Korea. Red carpets, fanfares and high-profile delegates were all put in place to welcome Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, and Ruler of Dubai. But behind the pomp, ceremony and regal splendour of the event, something far more significant was taking place. The foundations were being laid for a strategic partnership that could play a huge role in helping the emirate sustain its impressive growth plans.

At the beginning of the week there was the announcement that a US$5.4bn contract had been awarded to a South Korean company to develop Dubai's Deira area. The deal, penned in Seoul, was struck up between developer Sungwon Corporation and Deira Investment, a recently-created government entity with an initial capital of US$272m.

The partnership will allow the Korean giant to build a real estate and tourism development in downtown Dubai. In total Sungwon has signed contracts worth US$20bn with Deira Investment, which will see it build houses, shopping malls, public facilities and harbour facilities along the city's creek, South Korea's Yonhap news agency reported.

According to Yonhap, Sungwon plans to form a consortium with up to five other South Korean firms on the project, with construction taking place in three phases and scheduled to finish by 2012.

The deal followed Sungwon's recent announcement that it would invest US$1.2bn into the Middle East's property sector.

Meanwhile, last week also saw the signing of an Memorandum of Understanding (MOU) between the Dubai Chamber of Commerce and Industry (DCCI) and the Seoul Chamber of Commerce and industry (SCCI).

The agreement is aimed at enhancing economic co-operation and commercial promotion between the two chambers, opening up new channels of contact between their members and associated businessmen. It was also stated by both chambers that the MOU would generate economic partnerships between the countries and open debate on bilateral trade and customs legislations.

According to Obaid Humaid Al Tayer, chairman of the DCCI, the agreement will attract more Korean investment into the UAE.

"Signing the MOU prompts us to invite Korean companies to invest in the UAE, Dubai in particular, in the fields of banking, finance, services and logistics, benefiting from the investment incentives and facilities that Dubai offers to investors at the emirate's 17 free zones," he said.

Al Tayer also highlighted the importance of student exchange programs between Dubai and Korea for IT students, as they allow UAE nationals to gain academic and vocational skills from Korean IT expertise.

Speaking at the MOU signing ceremony, Kyung Shik Sohn, chairman of the SCCI, described Dubai as "an ideal environment for investment, especially with the presence of so many free zones in which many companies work." He added that Dubai had become the central business point for a number of Korean companies.