Press release on the results of the Russian-Korean business dialogue that ART DE LEX organized at the Eastern Economic Forum
THE ART DE LEX LAW FIRM WAS THE INTELLECTUAL PARTNER AND ORGANIZER OF THE RUSSIA-KOREA COUNTRY DIALOGUE AND BUSINESS FORUM
On 5 September 2015, the VIII Russian-Korean business dialogue took place at the Eastern Economic Forum in Vladivostok. The ART DE LEX law firm, Korea International Trade Association (KITA), and the Chamber of Commerce of the Russian Federation were the intellectual partners and organizers of the event.
The minister of commerce, industry, and energy of the Republic of Korea, Sang-Jick Yoon, the deputy minister of foreign affairs of the Republic of Korea, Hong-Kyun Kim, and the vice president of Korea International Trade Association (KITA), Junggwan Kim, represented the official delegation of the Korean side of the business dialogue, which began eight years ago.
The minister of the Russian Federation for the development of the Far East, Alexander Galushka, the first deputy minister of the Russian Federation for the development of the Far East, Alexander Osipov, and the vice president of the Chamber of Commerce of the Russian Federation, Georgy Petrov, represented the Russian side.
About 20 leading Korean corporations, including Lotte Hotels and Resorts, Daewoo Shipbuilding and Marine Engineering Co., LS Networks, Hyundai Merchant Marine, Samsung Electronics, Doosan Heavy Industries and Construction, Hyundai Motor Company, Woori Bank, Pantos Logistics, and Korean Air, participated in the dialogue.
In his welcome speech, the minister of the Russian Federation for the development of the Far East, Alexander Galushka, noted that the main focus in the development of the Russian Far East is on attracting private foreign direct investment. He said that the main task of the Russia-Korea country dialogue and business forum is to discuss real investment projects and their subsequent implementation.
The managing partner of ART DE LEX, Dmitry Magonya, served as the moderator of the first session on "Trade investment and promotion.” The session discussed the economic background of Korean investment in Russia, the most relevant issues facing Korean firms doing business in Russia, as well as investments in joint projects in Russia in a number of areas: the construction of hotels, the construction of municipal and energy infrastructure, and the financing activities of resident firms in the territories of priority development and the Free Port of Vladivostok. Furthermore, Dmitry Magonya unveiled a new edition of Doing Business in the Russian Federation, a legal guide for Korean investors and entrepreneurs that the partners and lawyers of ART DE LEX prepared, with the assistance of Korea International Trade Association (KITA).
During the session, Konstantin Ryzhkov, deputy director general of the Russian Direct Investment Fund, said that the trade turnover between Russia and South Korea at the end of 2014 increased to a record USD 25.8 billion, and he stressed that cooperation in the investment field shows great potential for development. Many Korean companies have invested successfully in the construction of various facilities and factories in Russia, such as Hyundai Motor, Samsung, LG Electronics, and Lotte Hotels and Resorts. Nevertheless, despite the fact that Korean products are widespread in the Russian market and are familiar to the Russian consumer, the amount of investment of Korean companies in Russia remains small–annually about USD 140-150 million. Konstantin Ryzhkov suggested that the Russian and Korean sides should work together to develop new approaches to increase investments by ensuring favorable conditions for Korean companies operating in the Russian Federation. He stated that one of the institutions aimed at improving the business climate is the Russian Direct Investment Fund, which co-invests with the world’s largest institutional investors, such as private equity funds, sovereign wealth funds, and leading companies in various industries. Finally, he observed that the majority of Korean companies are primarily interested in investing in companies of strategic importance.
Sergey Tsoi, the first deputy general director of OJSC RusHydro, spoke about the strategic importance of developing his company’s potential in the Far East, where its investment will amount to USD 1 billion in 1-2 years. He stressed the importance of cooperation with Korean partners in the energy sector. In particular, he highlighted an agreement with K-Water on the joint construction of the Primorsky water complex (PWC), including the pumped-storage station (PSP) 45 km from Vladivostok and hydroelectric power plants (HPP) on the Razdolnaya River. In addition to hydroenergy production, PSP and HPP will create a single waterway between the Khabarovsk and Vladivostok sea trading ports, reducing the length of the water transportation route from 2,400 km to 800 km. Furthermore, Sergei Tsoi expressed the desire to cooperate with the Korean Power Corporation KEPCO to construct the “Russia-DPRK-South Korea” energy bridge.
Kooyol Chong, the technical executive director of the Korea Water Resources Corporation, confirmed his company’s readiness to cooperate actively with RusHydro, recalling their 30 January 2015 memorandum of understanding. According to the memorandum, the parties agreed to collaborate on mutually beneficial projects in the fields of hydropower, renewable energy, and integrated water resources management in Russia, South Korea, and other countries. Speaking about the Primorsky water sector, Kooyol Chong noted that, in addition to the advantages Sergei Tsoi mentioned, PWC will protect the surrounding area from flooding, improve the reliability of the Unified Energy System (UES) of the East, and contribute to increasing the capabilities of exporting power to China.
Yong-Dok Song, president of Lotte Hotels and Resorts, noted that Lotte has been working with Russia since 1998 and discussed some major projects. In 2007, the company built the Lotte Plaza shopping center in Moscow, and in 2010, it opened the Lotte Hotel in Moscow and built a confectionery factory in Obninsk, Kaluga Region. In the future, Yong-Dok Song announced his company’s intention to build a hotel in St. Petersburg and Samara. The president of Lotte Hotels and Resorts expressed great interest in the construction of hotels not only in Russia as a whole but in the Far East in particular. Speaking about the main criteria of the holding company regarding the organization of business abroad, Yong-Dok Song said that, among many factors, the firm takes into account the absence of bureaucratic barriers. The president of Lotte Hotels and Resorts noted with regret that, during the construction of Lotte Hotel in Moscow, the company had to collect more than 100 documents and wait for more than a year to get a building permit.
Alexander Osipov, the deputy minister for the development of the Far East, responded to Yong-Dok Song’s speech and stressed the importance of minimizing bureaucratic barriers and the readiness to ensure predictability in matters of investment. He announced his willingness to provide legal assistance for investors to sort through the requirements and tax privileges, to consider appropriate regulations for implementing projects, and to create a more comfortable investment climate.
Olga Prokofieva, a member of the board of directors of the Energy group of companies, noted that, during the construction of a factory for producing components, the firm placed special importance on locating the plant in Komsomolsk-on-Amur, a territory of priority development (TPD). According to Olga Prokofieav, the TPD mechanism is a successful means of ensuring the flow of investment and capital into a region. She emphasized that the ultimate goal of Energy is to plot a new vector for the formation of an engineering cluster, the creation of which involves cooperation with Asian partners in Japan, Korea, and Taiwan that possess the most advanced technologies in the field of mechanical engineering.
Heung-Sik Min, the executive director of the Export-Import Bank of Korea, identified energy and agriculture as the most attractive industries for finance. The Export-Import Bank of Korea provides loans for foreign trade, insures transactions against political and other risks, and provides state guarantees for export credits. Heung-Sik Min said that supporting potential Korean residents in the territories of advancing social and economic development is of special interest to the bank.
Georgy Petrov, a vice president of Russian Chamber of Commerce, moderated the second session, “Territories of priority development and the Free Port of Vladivostok: The practice of realization,” which addressed the practical issues that Korean companies face in the territories of priority development and the Free Port of Vladivostok.
Doo-Sik Kim, the senior partner of the Korean law firm Shin & Kim, moderated the third session, “The expansion of cooperation in the maritime industry.” The session discussed the expansion of Russian-Korean cooperation in the maritime industry, maritime logistics, aquaculture, and shipbuilding.
Sung Woo Lee, a professor at the Korea Maritime Institute, gave a presentation on the maritime logistics in the Far East. Li Song cited examples of successful Russian-Korean cooperation, stressed the need for the development of the Northern Sea Route, and noted that the Far East is becoming a new logistics center of national importance.
Petr Savchuk, the deputy head of the Federal Agency for Fisheries of the Russian Federation, spoke about unleashing the potential of the fishing industry in Russia, which harvests 4.5 million tons of fishery products annually worth USD 4.5 million. To increase output, it is necessary to attract foreign investment in logistics projects, processing, and aquaculture. Petr Savchuk also spoke about the plan to create conditions for the processing of 600,000 tons of fish products with an investment of USD 900 billion. Investments in aquaculture will amount to over USD 1 billion. In his concluding remarks, Petr Savchuk called for cooperation among foreign partners to create and develop a modern infrastructure, with modernized trade and logistics centers, as well as platforms for trading and auctions.
An evening of cultural friendship, Russian-Korean Night, was an event that the ART DE LEX law firm organized with ALRUD, UST, as well as Shin & Kim. They received the support from the Federal Chamber of Lawyers of the Russian Federation and the Korean Bar Association.
South Korea Desk at ART DE LEX, under Yaroslav Kulik, prepared the Russian-Korean business dialogue.
The broadcast recording of the VIII Russian-Korean Business Dialogue at the Eastern Economic Forum can be found here.
A selection of photos from the Russian-Korean business dialogue appear below:
ABOUT THE EASTERN ECONOMIC FORUM
In accordance with the 19 May 2015 decree of the President of the Russian Federation, the annual Eastern Economic Forum took place in Vladivostok on 3-5 September 2015 to promote the economic development of the Russian Far East and to expand Asia-Pacific international cooperation.
The president of the Russian Federation, V. Putin, made a speech at the official opening of the forum. Y. P. Trutnev, the deputy prime minister, plenipotentiary representative of the president for the Far Eastern Federal District, and the head of the Organizing Committee of the Forum, also took part in the Forum. Other participants included the head of the Far Eastern Federal District, the heads of various federal ministries and departments of the Russian Federation and foreign states, and the heads of major international companies from Russia and the Asia-Pacific. In total, nearly 2,500 guests attended the event, where participants signed 80 agreements that totaled RUB 1.3 trillion.
Within the framework of the EEF were several dozen meetings and plenary sessions divided into three thematic groups:
- The Strength of the Russian Far East
Sessions in this section were devoted to the development of the energy sector (oil, gas, and energy in general), tourism, transport infrastructure serving cities in the Far Eastern Federal District, agriculture, timber, minerals (extraction and processing), and modern production methods and technology.
- The New Economic Policy in the Far East
This section dealt with the public and private financial assistance available for investment projects, the special aspects of doing business in the Free Port of Vladivostok, support for exports, and access to international markets.
- The future of the Asia-Pacific region
These discussions focused on the new economic opportunities for the Asia-Pacific region, the deeper integration of the Eurasian Economic Union (EEU) and the Silk Road economic zone, the territories of priority development, the capital markets of Asian countries in the Far East, and the diamond business.
In addition to other events, the forum scheduled direct dialogues between representatives of Russia and those of other countries: Japan, South Korea, China, and the Association of Southeast Asian Nations.
