By UN Journal Lee Jon-young

 

The following article was contributed by Choi Keong-ju, a professor of Keimyung University (Ph.D) and advisor of Korea-Saudi Friendship Society, to Diplomacy Journal for publication.—Ed.

 

Saudi Arabia's Vision 2030 is a comprehensive strategy for the kingdom to diversify its economy and achieve social reforms as it moves away from its oil-dependent economy. The plan was announced by Crown Prince Mohammed bin Salman in April 2016 and provides a blueprint for the Kingdom's long-term economic and social development.

 

Its main objectives are as follows. Firstly, it aims to diversify the economy to reduce dependence on oil exports, and to revitalize the economy by developing a variety of industries (tourism, manufacturing, finance, entertainment, healthcare, etc.). The Public Investment Fund (PIF) will be utilized to increase domestic and foreign investment and strengthen the role of the private sector.

 

 

Secondly, social reforms will increase women's participation in society and empower the younger generation.

 

This includes revitalizing the entertainment and cultural industries to improve the quality of life, promoting tourism, and seeking to move away from religious conservatism and toward a more open society.

 

The third is national capacity building, which aims to increase the efficiency of government agencies, eradicate corruption, establish a transparent administrative system, and improve the education and vocational training system to expand employment opportunities for young people.

 

Fourth, it aims to become a global hub and develop Saudi Arabia into an economic, cultural, and logistics center for the Middle East region, building high-tech and sustainable cities through large-scale development initiatives such as the NEOM project, which aims to build a futuristic smart city.

 

Major projects include the NEOM futuristic smart city construction project, Qiddiya entertainment and sports complex, Red Sea Project, a luxury tourist destination development project and Saudization policy.

 

With policies to reduce reliance on foreign workers and increase national employment, the 2030 Vision is focused on building a future where Saudi Arabia is competitive in the global economy and where the younger generation can realize their full potential.

 

 

In line with Saudi Arabia's Vision 2030, Korea is engaged in cooperation and strategic responses in various fields. Saudi Arabia is one of Korea's major economic partners in the Middle East, and cooperation is particularly active in the energy, construction, infrastructure, and technology sectors. The business areas in which Korean companies participate and cooperate are centered on the following main pillars.

 

Firstly, Saudi Arabia is one of the world's largest crude oil exporters, and Korea continues to strengthen cooperation with Saudi Arabia to ensure a stable supply of crude oil. Korea is also expanding cooperation in the clean and renewable energy sector, participating in future energy projects such as hydrogen energy, solar power, and wind power.

 

Secondly, Korea is engaged in construction and infrastructure projects, with Korean construction companies actively participating in large-scale development projects in Saudi Arabia, such as Neom, Boom Garden, and Qiddiya, contributing to the construction of smart cities, transportation infrastructure, and logistics hubs by utilizing Korean advanced technology and know-how.

 

The third is technology and digital innovation cooperation, where companies such as Naver and Kakao are exporting and applying Korean ICT (information and communication technology) and digital innovation technologies to Saudi Arabia, and collaborating on smart cities, AI, big data, and 5G network construction. There are discussions on how to utilize Korean technology in the development of future cities, such as the Neom project.

 

Fourth, in the area of defense and security cooperation, Korea and Saudi Arabia are also strengthening cooperation in the defense industry, exporting military equipment and promoting joint research and development. In particular, Saudi interest in Korean K-defense technologies (Cheongung missiles, K-9 self-propelled artillery, etc.) is high.

 

Fifth, cultural and educational exchanges are being expanded, utilizing Korean K-content (K-pop, dramas, and movies) to expand cultural exchanges with Saudi Arabia.

 

In the field of education, Korean higher education and vocational training programs are shared to help build the capacity of the Saudi youth.

 

Sixth, in the field of medical and healthcare cooperation, Korean advanced medical technologies and systems are introduced to Saudi Arabia, and cooperation is being made in building hospitals, exchanging medical personnel, and providing digital healthcare solutions.

 

Seventh, in the field of private sector cooperation, Korean companies are entering the local market, strengthening local partnerships, and expanding investments in line with Saudi Arabia's 2030 vision. In particular, the government is providing infrastructure and networks to support SMEs to enter the market.

 

Eighth is strategic cooperation at the government level. The Korean government regularly holds high-level summits and economic cooperation committees to strengthen the strategic partnership with Saudi Arabia.

 

The two countries are also discussing ways to lower barriers to trade and investment through the signing of a free trade agreement (FTA). South Korea sees Saudi Arabia's 2030 vision as an economic opportunity in the Middle East and is expanding strategic cooperation in various fields such as energy, construction, technology, and culture. This is aimed at strengthening the win-win relationship between the two countries and enhancing the global competitiveness of Korean companies.

 

Recently, Saudi Arabia's economic diversification has accelerated, raising expectations of expanded economic cooperation. Not only is 2030, the target date of Saudi Vision 2030, approaching, but the Saudi government's efforts to diversify its economic structure are expanding due to increased fiscal revenues from the recent rise in international oil prices.

 

Saudi Arabia is accelerating its development efforts through infrastructure construction and cooperation with developed countries, especially in the petrochemicals, logistics, green energy, and electric vehicles sectors, and is also accelerating large-scale development projects totaling $879 billion, including Neom City.

 

Korea has traditionally cooperated with Saudi Arabia in the import of crude oil and construction orders, and many of the industries that Saudi Arabia is currently focusing on developing are areas where we have comparative advantages, which will allow us to cooperate across a wide range of industries.

 

In order for Korean companies to enter the Saudi Arabian market, it is important to thoroughly understand the local market environment, culture, regulations, etc. and establish a strategy. The main ways to enter Saudi Arabia include identifying the demand in the country's major industries (oil, gas, construction, healthcare, tourism, etc.), analyzing the competitive situation of local companies and other foreign companies to develop a differentiation strategy, and understanding Saudi culture, religion (Islam), and business practices to develop a localization strategy.

Working with local partners is very important in Saudi Arabia, and partnering with a local company or agent can facilitate market access. In addition, a local subsidiary or joint venture should be established to gain a better understanding of the Saudi market and overcome regulations. Take advantage of overseas expansion support programs offered by Korea Trade Insurance Corporation (K-Sure), Korea Export-Import Bank (KEXIM), KOTRA, and others, and understand Saudi Arabia's Vision 2030 policies and engage in projects that align with them.

 

In addition, companies should thoroughly understand and comply with Saudi Arabia's foreign investment regulations, tax policies, and labor laws; comply with relevant laws and regulations to protect intellectual property rights in the country and take legal action if necessary; and establish localized marketing strategies that take into account the culture and language of Saudi Arabia.

 

Lastly, they should hire local talent to overcome cultural differences, develop a better understanding of the local market, and establish education and training programs for local employees to increase productivity and efficiency. Distribution and manufacturing companies should consider the geographical characteristics of Saudi Arabia to establish efficient logistics and supply chain systems, and work with local distribution networks to facilitate market access for products and services.

 

Furthermore, it is necessary to continuously monitor the political and economic situation in Saudi Arabia, establish risk management strategies, build a sustainable business model that considers environmental and social responsibility (CSR), and enhance corporate image through activities that contribute to the local community.
Ultimately, these strategies will help Korean companies successfully enter the Saudi market and achieve sustainable growth.