S.Korea bets on 2nd Middle East boom for SMEs, startups

The Middle East is emerging as a key export market for South Korean small enterprises and startups desperate for global expansion to tide over the economic slowdown. 

Backed by the South Korean government's diplomatic efforts, domestic SMEs and startups are now preparing for the second wave of the so-called Middle East boom.

“We will do our best to support South Korean SMEs expanding to Saudi Arabia and the United Arab Emirates (UAE), which will lead to the second wave of the Middle East boom,” Minister of SMEs and Startups Lee Young said in a recent social media post. 

Middle Eastern countries such as Saudi Arabia, UAE and Kuwait were the main source of foreign income for South Korea between the 1970s and early 1980s. During this period, construction companies won a raft of large-scale orders to build bridges and high-rise buildings, as well as a man-made river in Libya.

This week, Minister Lee is traveling around the Middle East and taking on the role of a “salesperson” to promote domestic SMEs and startups as their business partners.

Her efforts to build trust with the Middle Eastern countries seem to be paying off.

Saudi Arabia has promised drastic deregulation for South Korean SMEs and startups, including simplifying the procedure for business registration permits for companies based in a global business center in its capital city of Riyadh.

Such regulatory moves come as the oil-rich kingdom pushes its estimated $500 billion Neom megacity project.

Neom is to be a smart city fully run on renewable energy such as solar power and green hydrogen as well as cutting-edge technologies, including 5G networks, the Internet of Things, cloud computing and robotics.

Earlier this week, Minister Lee signed an agreement to create a $160 million fund, in which Saudi Arabia is a major investor.

The fund was first mentioned in November of last year during a meeting between Crown Prince Mohammed bin Salman of Saudi Arabia and South Korean President Yoon Suk Yeol in Seoul.

Other than the Middle East, the SME ministry is endeavoring to find export channels in the US.

During President Yoon’s state visit to Washington, D.C. in April of this year, South Korean SMEs clinched a total of 10 business deals, including technology exports, with US companies. Those deals are worth up to 550 billion won ($430 million).

In Japan, domestic SMEs are also feeling a tailwind thanks to the thawing of relations between the two countries, which had been frozen under the previous government.

Last month, South Korea hosted a sales promotion event for its exporters in Tokyo, Japan.

Write to Hyung-Chang Choi at calling@hankyung.com

Yeonhee Kim edited this article.