- 'Sapporo suggests that Pyeongchang will experience a boom in tourism.'
Koreas hosting of the 2018 Pyeongchang Winter Olympics is expected to be a boon for the domestic economy, with economic institutes forecasting massive economic effects for years to come.
A Hyundai Research Institute report estimated on Wednesday that the games will generate 64.9 trillion won ($61 billion) in direct and indirect benefits.
Hyundai Research Institutes analysis is the most recent to date. It forecasts direct economic effects of the 2018 games to come in at 21.1 trillion won, more than double the economic benefits reaped by the Korea-Japan World Cup in 2002. In addition, the institute predicted indirect financial gains to reach 43.8 trillion won in the decade after the Olympics.
Included in the indirect benefits, the institute sees Pyeongchang county reaping tourism gains of 32.2 trillion won, not including costs. Benefits to the brand image of Korea and Korean companies are estimated to hit 11.6 trillion won.
"In the case of Sapporo, Japan, the city emerged as an international winter tourist destination after it hosted the Sapporo Winter Olympics in 1972," said Park Tae-il, chief researcher at the Hyundai Research Institute. "Sapporos precedent suggests that it is likely that Pyeongchang will also experience a boom in tourism in the next 10 years after the Winter Olympics have ended."
The sense of euphoria is shared by all Korean research institutes.
The state-run Korea Institute for Industrial Economics and Trade thinks the event will create 230,000 jobs. It also suggested that in Gangwon, where Pyeongchang is located, industries will enjoy production gains of more than 11.6 trillion won. It projects that the construction, airlines, lodging and hospitality sectors stand to benefit the most.
The Korea Culture and Tourism Institute predicts 195,000 international tourists will visit Korea to watch the Pyeongchang games, spending 392 billion won. The institute estimates that over 2,600 people from 80 countries will attend the games.
Corporations, particularly retailers, were fast to get on the Pyeongchang gravy train, having already introduced elaborate marketing campaigns. Hyundai and Lotte department stores kicked off a three-day sale today and gave away gift certificates to customers who spend over 200,000 won.
The convenience store Family Mart will start selling a 500 milliliter bottle of Gangwon Pyeongchangsu mineral water for only 100 won today through Ticket Monster, a social commerce site, which is an 86 percent discount from the original retail price of 700 won.
Hyundai Heavy Industries has a launch ceremony for a production platform (PPS) for Thailands PTT Exploration and Production Public Company Limited ,Thursday, at its factory in Ulsan. Hyundai Heavy Industries won a $ 1 billion contract for the PPS for the Bongkot South gas project in September 2008. The platform weighs about 30,000 tons and can produce 385 million cubic feet of natural gas.
The free trade pact with the European Union that went into effect this month is expected to fuel growth for Koreas renewable energy industry, a report by a think tank said yesterday.
The Institute for International Trade said that the immediate lowering of tariffs, which reach up to 3.3 percent, will give companies in such areas as solar energy and wind power generation a clear advantage over rivals in Japan and China that have been eyeing the lucrative EU market.
IIT, part of the Korea International Trade Association, said the free trade agreement will not only raise the price competitiveness of local products in Europe, but open new opportunities in such areas as joint research and technology cooperation. The developments will enhance local companies overall competitiveness down the road.
The worlds single-largest economic bloc accounts for 82 percent of the worlds solar energy and 51 percent of the wind generation market.
It also said that the clause in the FTA that bans European governments from asking Korean companies to provide information on past renewable energy projects when participating in project bids should make it possible to gain access to the market.
"Korea has also cut tariffs, which reach up to 8 percent for some products, and the expected rise in imports of key systems and parts may actually benefit the overall competitiveness of wind power generators made in the country and marketed abroad," the think tank said.
However, it said that there may be fewer benefits in terms of both exports and imports for the power cell sector since it is not fully developed at present.
The Yellow Sea Free Economic Zone (YESFEZ), a government project in progress, may also host a specialized complex for small and medium-sized businesses (SMBs).
The Korea Federation of Small and Medium Business announced on Thursday that it is planning on building a specialized complex for SMBs in the free economic zone and will be conducting a survey on demands to see how many companies would be willing to relocate.
SMBs relocating to the complex will be supplied with land at a discounted price that amounts to 75% of market prices.
The federation is planning to encourage more participation by businesses, such as submitting a co-op application for a large chunk of the land. "We are currently holding working-level talks with the people in charge of YESFEZ. We will be drafting a more specific business plan upon receiving results from this survey," said the federation official.
"The YESFEZ will rise in economic value as regional trade with Northeast Asian countries like China soars. Also, companies based in the free economic zone can benefit from other government subsidies," he explained.
The Korean government had started developing the YESFEZ from early 2008. The project is aimed at building a world-class high-tech industrial cluster and base for exports headed to China, and will cover 55.05 km2 of land based primarily on Pyeongtaek and Dangjin ports.
The Korea Trade-Investment Promotion Agency (KOTRA) pointed out that South Korea should make better use of the Korea-ASEAN Free Trade Agreement (FTA) in order to beat rival countries such as Japan and China.
According to a report on promising export items for the Korea-ASEAN FTA, published by KOTRA on Wednesday, utilization of the Korea-ASEAN FTA in exports to the Southeast Asian market as of last January was relatively low at 29%, compared to the 97% utilization rate of the FTA with Chile.
Local buyers in five major ASEAN countries - Indonesia, Malaysia, Thailand, Philippines, and Vietnam - named lack of FTA-related information and complex and time-consuming procedures for certificate of origin issuances as some of the difficulties that prevented full utilization of the FTA.
Exclusion or improper classification of major Korean export items also lowers customs benefit, and should be fixed to increase FTAs utility, the report further argued.
China had signed an FTA with ASEAN two years earlier than Korea, in July 2005, while Japans Comprehensive Economic Partnership Agreement (CEPA) with ASEAN took effect since December 2008.
China and Japan are ahead of Korea in the FTA competition, claimed the report. China had dominated the ASEAN market even before the FTA deal by drawing on its geographical advantage and low-priced products. Japan has also inked separate bilateral agreements with each ASEAN country.
"Because the Korea-ASEAN FTA is a product of negotiation with 10 distinct ASEAN countries with different national interests, the list of tariff concessions is short and trade liberalization low, so the utilization of FTA is hard to increase," a KOTRA official said. "In order to make better use of the FTA, the government should sign separate bilateral FTAs with major countries within ASEAN."
Koreas export to ASEAN countries increased to $53.2 million last year from $32 million in 2006, which is before signing the FTA. ASEAN was ranked fourth in the list of Koreas export destinations (in the order of China, U.S., EU, ASEAN, and Japan) in 2006, but rose to rank second after China in 2010.
Exports of automobiles, construction equipments, flat-rolled steel, and other promising items increased, while other items like cotton saw lower exports despite lower custom duties. This lackluster performance is mostly the result of competition with low-priced Chinese products, decrease in demand, and other changes in local market conditions, which canceled out the advantages offered by the FTA.
South Koreas free trade agreement (FTA) with China is facing significant hurdles. There has been confusion over the trade deal with China within the Korean government. At the same time, ratification of the FTA with the United States is being delayed several times. The schedules for the next general and presidential election are mounting difficulties with the China deal, too.
Concerns over a trilemma of the Korea-China FTA are growing, which might fail the countrys plan to make strong economic ties with large markets like the U.S., the European Union (EU) and China.
The first dilemma is that the Blue House and government agencies seem confused about the issue as the Chinese government is putting more pressures on the Korean counterpart to hold the first round of negotiation. What is vital an inter-country negotiation is to mobilize all brains and to show unity among government officials. However, FTA-related government agencies are only busy with trying to please interest groups, avoiding their responsibilities. Not only within the Blue House and the Ministry of Strategy and Finance (MOSF), but also within the Trade Bureau, views about the FTA with China havent come to a conclusion.
Against this backdrop, Minister Seo Gyu-yong of the Ministry for Food, Agriculture, Forestry and Fisheries (MIFAFF) claimed that about 300 out of 1,500 agricultural products should be classified as sensitive items to exclude them from the list of the FTA with China. Some are deeply worried about such claim, because it could weaken the Korean governments bargaining power.
Another hindrance is the delayed ratification of the KORUS FTA. The Korean government initially planned to use the FTA with the U.S. to stimulate and get concession from China by passing the ratification bill. Despite possibilities of U.S. Congress to ratify the trade deal, it is becoming more uncertain whether the Korean National Assembly will pass the ratification bill or not.
Koreas election schedule is another obstacle to the deal with China. General elections are coming up in April next year, followed by presidential elections in December. As the deadline nears, politicians are treading carefully to win over farmer and fisher votes. The Blue House and ruling party are muting untimely discussions of the free trade deal with China, which could upset this substantial chunk of voters and bring undesired results.
Critics also place the blame on the shortcoming of Koreas trade-related institutions. The ministry in charge of trade negotiations has had virtually no results since the FTA inking with the US and EU. Trade Minister Kim Jong-hoon, who will be completing his four year term this coming August, is already befuddled with mistranslations with the EU and US agreements and demands made by the National Assembly. Yet, there are no plans to improve and better equip the nations trade institution.
The failure to conclude a dealt with China will be the glitch in the governments ambitious multi FTA strategy, say critics.
The groundwork for free trade with China had started in 2005, when the government commissioned a joint research with the private sector to better explore the issue. Seven years had passed since, with no notable progress - a marked difference from the dealings with the US and EU. "It is highly unusual for the government to restart preparatory talks after the joint research," the Samsung Economic Research Institute had said in a recently published report. "We need to promptly assess what we have to lose and gain in the deal with China," said Professor Lee Hong-shik of the Korea University. "The governments evasion and deferrals can leave an opening for Taiwan, Hong Kong, or other rivals to start negotiations ahead of us."
CJ O Shopping, a Korean home shopping channel, said yesterday that its Chinese joint venture launched a second home shopping channel in China and started digital broadcasts.
Dongbang CJ, the joint venture with Shanghai Media Group in China, has acquired channel No. 20 and broadcasts its home shopping programs to 2.5 million digital cable viewers in Shanghai, according to CJ O Shopping.
CJ O Shoppings first channel, which launched in 2004, currently provides analog programming. With the new channel, CJ O Shopping reaches some 10 million analog viewers plus 2.5 million digital viewers in Shanghai and its neighboring regions.
South Korea's free trade agreement (FTA) with the European Union, which came into effect this month, is proving effective in expanding trade between the two regions.
Korea's exports to EU from July 1st to 13th logged $1.5 billion, which is a 19% jump from the same time last year, the Korea Customs Service said on Sunday. Imports also grew 16% to bring in $1.7 billion.
Korea's exports to the EU had dropped 9% in June, as companies were postponing their dates to qualify for the duties cuts from July. Considering the fact that total exports for the first half (January to June) grew 16.7%, the sudden rise to 19% in the first half-month of July should be attributed entirely to the FTA, said the customs service. "Trade with EU grew despite growing concerns over Europe's fiscal crisis, thanks to the FTA," said a customs official.
Korea-EU FTA utilization rate scored 55% for exports and 13% for imports. The utilization rate refers to the share of export and import products that receive real benefits from tariff cuts. The utilization rate for Korean exports to EU scored higher (55%) than the numbers for ASEAN (29%) and India (17.7%).
"We have negotiated a tariff reduction deal that is beneficial to us, and the preparations went smoothly for exporter certification and other policies, which allowed the FTA to bring visible results faster," said a customs official.
The government will be expanding the certified exporter policy, which simplifies and speeds up the origin certificate issuance procedure. Also the government will organize a support task for overseas customs-related grievances and expedite the signing of memorandum of understanding (MOU) on tax investigations that protects Korean firms from EU tax probes.
Office of Commercial Affairs, Royal Thai Embassy in Korea
Source : http://www.depthai.go.th