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Research unit considered to support emerging market entry

April 19, 2011 - 18:48 By 김주연
The government is mulling a research institution to provide the groundwork to help local companies advance into emerging markets, Finance Minister Yoon Jeung-hyun said Monday.

“In order to attain sustainable growth, it is important to consolidate ties with emerging countries by establishing cooperative channels and expanding free trade agreements,” Yoon said at a policy meeting.

He said there is a need to monitor risk factors for Korean firms’ business interests in rapidly developing regions and take preemptive steps to safeguard against dangers unique to emerging markets.

“We need to systematically accumulate information required for our companies to make inroads into emerging markets through in-depth research into those regions,” Yoon said.

Consideration of this type of research body came on growing demand from local builders and management consultants to win more contracts in rapidly developing countries in Southeast and Central Asia. The Finance Ministry says it is the state’s job to help them advance into the region by developing networks and growing research expertise.

“European contractors dominate African public works while the Spanish take up a lot of infrastructure contracts in Latin America. Korea aims to grab more projects in developing nations and we lack expertise and experience,” Cho Won-kyung, director of International Economic Affairs Bureau at the ministry said.

The proposed research unit will gather regulatory information for private management consulting firms, which will then be channeled to guide local companies entering the region.

Yoon called for state-run trade agencies such as Korea Trade-Investment Promotion Agency to support the information-gathering process.

Local companies win an almost negligible portion of consulting contracts organized by Multinational Development Banks. Korean firms took 0.1 percent of public infrastructure projects financed the World Bank in 2009, and 0.66 percent from the Asian Development Bank in 2009. Mindful of the rising competition for contracts in the developing world, Seoul is trying to give local builders market information critical to win bids.

“What we’re trying to do here is to lower entry barriers, because it is in our interest to increase development assistance to the developing world and we need to take the private sector with us,” Cho said.

Seoul plans to create about 2.5 trillion won ($2.29 billion) worth of development consulting, assuming the portion of contracts won from MDBs rise up to 2 percent.
By Cynthia J. Kim (cynthiak@heraldcorp.com)