The South Korean presidential office said Sunday that the establishment of diplomatic ties with Cuba would create new economic opportunities for Korean companies, though it conceded it would take time.
“The establishment of diplomatic relations and the future opening of a permanent mission in each country will lay the groundwork for expanded economic cooperation in a gradual manner," the presidential office touted the anticipated impacts of forging of ties announced on Wednesday.
The office admitted that "direct trade with Cuba is significantly restricted due to United States' sanctions on Cuba." This means traders need to move goods and money via third countries such as Panama.
The US currently maintains an economic embargo of Cuba that was first imposed in the 1960s, following the revolution led by Fidel Castro and the nationalization of properties belonging to US citizens and corporations.
But the office highlighted that Cuba holds the potential to emerge as a promising new market, ripe with opportunities for economic expansion and development if US sanctions are lifted.
Cuba is the largest island country in the Caribbean and has a population of over 11 million people. Although Cuba's per capita gross domestic product in 2022 was $2,256, it has enormous potential for further economic development, it said.
"Cuba stands as a key repository for nickel and cobalt, vital for secondary battery production, signifying abundant potential for collaboration in the mineral supply chain sector," the presidential office said.
The presidential office explained that Cuba was the world's fifth-largest producer of nickel, and the country has the world's fourth-largest known cobalt reserves.
Seoul also noted that Cuba anticipates exporting agricultural and fisheries products to South Korea, leveraging its fishery resources, particularly sea cucumbers, as well as high-end rum and cigars.
South Korean manufacturing businesses also will be able to explore opportunities for expansion in sectors such as consumer goods, electronics, and machinery, given that Cuba is currently having commodity shortages due to US sanctions.
Cuba has identified the mitigation of its chronic energy crisis as a paramount task for economic recovery, actively seeking to expand its power generation infrastructure and promote the development of renewable energy sources.
"This creates an opportunity for Korean companies with strengths in energy sectors such as power generation and plants to capitalize on and explore entry into the Cuban market," the presidential office said.
With the establishment of diplomatic relations, there is anticipation that future official economic agreements, currently lacking at the government level between the two countries, could be signed, potentially alleviating constraints on Korean companies' market entry.
Furthermore, South Korea's opening of a diplomatic mission in Cuba will facilitate on-site support for Korean companies throughout the entry process.
The presidential office also stressed that it would be a great opportunity for Korean cultural businesses to tap this emerging market by pursuing business in Cuba. Currently in Cuba, "ArtCor," a group of roughly 10,000 fans of Korean popular culture, is in operation as a sign of growing public interest in South Korea.
Furthermore, it noted that “formal ties with Cuba will help lay provision of systematic consular support for Koreans visiting the Caribbean nation."
According to the South Korean Foreign Ministry, about 14,000 Koreans used to visit Cuba each year before the COVID-19 pandemic.
South Korea established diplomatic relations with Cuba on Wednesday. Cuba is the 193rd country which South Korea has built diplomatic relations with. Cuba had been the only Latin American country with no diplomatic relationship with South Korea.
