A Russian national flag flutters in front of the bridge over the Golden Horn bay in the Russian far-eastern city of Vladivostok September 10, 2012. Reuters/Sergei Karpukhin

The Korean Agency for Trade Development has opened an office in Vladivostok as more South Korean businesses look to boost investment in Russia’s Far East to take advantage of new free trade zones and incentives.

Korean investors are developing almost $70 million worth of projects inside special economic zones in Russia’s Far East, where they can claim tax breaks and a preferential customs regime, with some estimates saying this spending could surge to $3 billion in coming years.

This would be on track to mirror Chinese funds flowing into the region. Chinese capital is involved in 28 projects in Russia’s Far East with total investment estimated at $4 billion.

The Korean agency, known as KOTRA, opened its doors in November to assist South Korean companies wanting to target the opportunities attracting Chinese investors, providing information on the region and projects.  This includes tourism which has seen the number of South Korean visitors to Vladivostok jump this year.

Jeju Air airlines pilots in Vladivostok airport as the Korean budget airline launched a new Seoul-Vladivostok flight this year. Vitaliy Ankov/Sputnik

The office in Vladivostok, the largest Russian port on the Pacific Ocean, will offer advice to investors in Korean about tax benefits in the Far East, as well as measures to support entrepreneurs, hiring staff, customs clearances and other areas, an official at the office said.

“We expect that the opening of the Center for Support of Korean Investors in Vladivostok will accelerate the process of investment in the Russian Far East from Korean businesses, as well as enhance economic exchange between our countries,” KOTRA President Kim Jae-hong told the local media.

“We work in the interests of 33 companies that plan to invest or are already investing in joint projects,” Kim said.

South Korean investors could emulate the commitment of the Chinese, according to Russia’s Ministry for the Development of the Far East.

The Ministry expects direct investment from Korea to reach $3 billion over three years, Deputy Minister for Development of the Far East Alexander Krutikov said at a meeting of the Russian-Korean Committee for the Far East and Siberia.

“The goal is ​​absolutely achievable,” said Krutikov.

However, there are examples of unsuccessful South Korean business projects in Russia’s Far East and that’s mostly because of the absence of  relevant information, economist Alexander Latkin told Asia Times.

He cited the example of Hyundai Heavy Industries, which could not get a product out for a whole year.

“With the arrival of the Investor Support Center, those problems should be resolved,” he said.

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