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  Korea Report - March 2007
  Author : Hwang & Co     Date : 07-04-11 09:41     Hit : 52148    
Topics.

-Korea and USA concluded a FTA through the laborious nego since June 2006.
-FTA deal with USA to boost for Korea to forge pacts with other economic giants in the world.
-Japan again denied undeniable past wrong.
-Government lifted ban partially on embryonic stem cell research.
-NK bolted out of six party talks, complaining delayed transfer of the fund.
-2 Koreas held ministerial level talk to settle the pending issues.
-Defense Ministry starts the project to improve defense system of the country.
-GNP has changed its hard line approach to NK.
-BAI concluded Lone Star¡¯s acquisition of KEB is improper and can be nullified.
-Korea signed long-term LNG supply deal with Rasgas.
-Affiliates of HMC are investigated by tax authority.
-Korea eyes a second boom in Middle East construction market.
-Korean Big 3 feel confident to secure $30bil NB orders this year.
-China became the first in receiving order in Feb for 2 consecutive month.
-DSME starts to receive capsize bulker orders.
-KLC made big supramax bulker charter deal.

GOVERNMENT AND SOCIETY

Korea and USA concluded a free trade agreement in Seoul on April 2, which would be the biggest trade accord ever for Seoul and the largest for Washington since NAFTA in 1993. This brings to an end the laborious and intense negotiations that began in June 2006. 2 sides missed a March 31 deadline, extending 2 more days to work out sensitive issues like agriculture, automobiles, and textiles. Both sides originally aimed to conclude the talks by March 30 at 7 am local time to meet the July 1 expiry of the Bush administration's trade promotion authority. The new deadline still gave negotiators enough time to submit the deal to US Congress for the minimum 90-day review. The fast-track authority gives the White House the right to expedite trade deals so Congress can approve or reject the deal, but not alter it.
Seoul received wider access to the sensitive US textile market by receiving immediate tariff removal on 61% of the total US import amount, instead of current 13%. In return, Korea opened up its sensitive agriculture markets, including pork and oranges, although it succeeded in protecting rice. Korea will be allowed to phase out its 40% tariff on American beef imports over 15 years. Korea agreed to immediately eliminate its 8% tariff on American passenger cars, and to change its non-tariff barrier of levying tax based on engine size. USA in return agreed to immediately remove its 2.5% tariff on Korean passenger cars with engine sizes of under 3,000 cc. The tariff on automobiles with engines larger than 3,000cc will be removed within 3 years. Tires and pick-up trucks will have tariffs eliminated in 5 years and 10 years, respectively.
President Bush said in a letter to leaders of Parliaments, "USA-Korea FTA will generate export opportunities for US farmers, ranchers, manufacturers, and service suppliers, promote economic growth and the creation of better paying jobs in USA, and help American consumers save money while offering them greater choices, enhancing strong USA-Korea partnership." Calling for the support for the National Assembly to ratify the FTA agreement, President Roh also pledged to compensate farmers that fall victim to the open market, prepare welfare programs, and to support research and restructuring for the pharmaceutical industry. The FTA bill will go to the National Assembly in Sept, just months before the Dec 2007 presidential election and the April 2008 general race.
Following are some details of the economic relationship between Seoul and Washington.
Two-way goods trade totaled more than $71.5 bil in 2005, with Korea having a surplus of more than $16 bil. The deal could add $10.9 bil to Korea's GDP and $8.9 bil to the US economy. Washington was Seoul's third-largest trading partner in 2005 after China and Japan. Korea was the seventh-largest US trading partner.

Korea's successful deal with the world's largest economy is likely to boost for the Korean government's efforts to forge pacts with other economic giants. A joint study is currently under way for a Korea-China FTA. The first round of negotiations between Korean-EU is scheduled for next month. Negotiators are set to begin the 10th round of FTA talks with Canada on April 21, 2007. Talks are also under way to form a Comprehensive Economic Partnership Agreement with India. President Roh said during his Mideast tour in March that Korea wants to start FTA talks with the Gulf Cooperation Council, involving Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE. Korea has reached a partial deal to liberalize goods trade with member countries of ASEAN. Korea signed its first free trade pact in October 2002 with Chile, which took effect in April 2004.
The exports to Chile, the first ever FTA partner to Korea, reached $1.57 bil between April 2006 - Feb 2007, with a sharp increase from the $526 mil during April 2003 - March 2004. In the first year following the FTA, exports soared 57.6% on year to $829 mil. Shipments rose 46.8% in 2005 and 44.2% in 2006.

President Roh nominated Han Duck-soo, former Finance Minister during March 2005 - July 2006, as his new prime minister, and his former secretary for civil affairs, Moon Jae-in, as his new chief of staff. Han would succeed Han Myeong-sook, who resigned to return to Uri Party, likely as a potential presidential candidate for the party.

Japanese Prime Minister Shinzo Abe asserted that there is "no proof" that Tokyo forced at least 200,000 "comfort women" to serve as sex slaves in about 2,000 Japanese army brothels in Korea, China, Taiwan, Indonesia and the Philippines during World War II. Abe's comments contradicted Japan's statement of regret in 1993 when a top government spokesman issued a statement of sincere apologies and remorse and acknowledged that Japan's imperial army was involved "directly or indirectly" in sexual slavery, after documents were found in the archives of Japan's Defense Ministry in 1992, which indicated that the military was directly involved in running the brothels. But the then parliament did not approve the apology.
Most of the victims were Koreans and Chinese, but some were from other East Asian countries and even Europe. 3 elderly women, all survivors of Japan's wartime sexual enslavement, testified before the US Congress last month, denouncing Japan for its refusal to apologize.
USA has avoided public involvement in historical disputes between Japan and its neighbors, but last month the House of Representatives held hearings on a resolution calling for Japan to fully acknowledge and apologize for the sexual abuse. Rep Michael Honda, who submitted the resolution, urged Tokyo to officially apologize for "undeniable past wrongs," saying such an apology will only "increase Japan's standing as a member of the community of free, democratic nations." In European countries, it is a punishable offense to deny the Holocaust.
The Japanese government position has been one of admitting moral but not legal responsibility. The Japanese government claims that even if the women were held involuntarily, there was no law against it at the time, and if coerced sexual relations were illegal, the laws did not apply in militarily-occupied territories. In 2000, the Tokyo District Court dismissed a case brought by 46 former sex slaves from the Philippines who accused Japan of war crimes and crimes against humanity, ruling that "crimes against humanity" were not part of international law at the time. An 80-year-old ex-Japanese Army serviceman made a critical remark that during the war, they were engaged in atrocities against those women.
The problem is that Japan did not have an equivalent of the Nuremberg trials to establish a complete and irrefutable record of the war crimes in Asia. Moreover, the Japanese government burned many of its own records, providing the opening for statements like Abe's ¡°there is no proof".
The Japanese government has asked for NK's official apology and compensation, saying that the NKorean government was very clearly involved in the kidnapping of Japanese perpetrated on several occasions. People over the world feel stronger antagonism against the Japanese attitude if it disclaims responsibility for an atrocity during WWII, while persistently asking for NK's apology for the kidnapping of its people.

The Fair Trade Commission slapped a combined KW552 mil in fines against the nation's 3 largest newspaper companies, Chosun Ilbo, Joongang Ilbo and Dong-A Ilbo, for supplying free copies. Such an act is considered "unfair customer solicitation" under fair trade rules. The FTC also ordered 54 newspaper branches that lured subscribers by offering overboard gifts and free issues to correct their acts and fined 48 of them a combined KW75.4 mil.

Seoul City has chosen the first blacklists of incompetent and delinquent officials who will be relegated to low-rank duties, as part of the mayor's drastic bureaucratic reforms.. The list should make up 3% of each division staff. The mayor met with 4 public officials' unions to ask for their cooperation, but the unions have insisted they will protest against the city government's plan. The union members reportedly said that the unions have almost tripled their memberships after the city government made a call to blacklist their officials.
The Bank of Korea, often called "god's blessed workplace" for its highly competitive pay and lifetime employment, unveiled new policies that will eventually oust the bottom 5% of its employees, by forcing them to accept demotions, pay cuts or even an unpaid leave of absence. The central bank's tougher HR policy will likely be followed by other public banks. The BOK cannot fire a staff member without the union¡¯s consent.

Private universities joined a growing call for the government to scrap its decades-old control of student admission rules, urging to eliminate the '3 nots policy' and grant more autonomy to colleges in choosing their students. The "3 nots policy," refers to forbids universities from managing their own entrance exams, ranking students based on their high schools, or accepting financial donations for admitting students. Seoul National University slammed the "3 nots policy" first, claiming that the policy has been an "obstacle" to fair competition among universities. However, President Roh defended the government's policy, saying that the abolishing the "3 nots policy" would only forfeit the equal education opportunities in the nation. Most universities across the nation heavily depend on the scores of national college entrance exams held once a year to screen students, and the government has tried to put more weight on high school grades to balance fairness.
GNP¡¯s presidential hopefuls jumped into the row, strongly opposing the policy, saying that the '3 nots policy' is one of the Roh administration's governing mistakes.

The National Bioethics Committee decided to lift part of a temporary ban on embryonic stem cell research, on condition that researchers only use "leftover" embryos from in vitro fertilization treatment that otherwise would be discarded, ending an eight-month debate on the controversial issue, following Hwang Woo-suk scandal. The Seoul National University research team claimed to have created the world's first cloned wolves to help protect the endangered species. The team's leader was a key member of the team led by disgraced scientist Hwang Woo-suk, which produced the world's first cloned dog, Snuppy, in April 2005. The team removed somatic cells from a wolf bred in the zoo and implanted them into 251 ova extracted from 41 dogs. Then, the fertilized eggs were transplanted to 12 female wolves.

Korea has signed a MOU with the Qatar government to expand bilateral cooperation in the information technology sector in Qatar. Specific fields of cooperation include a ubiquitous city or futuristic city project that allows people to get networked anytime, anywhere through a ubiquitous computing network, as well as WiBro portable internet and digital multimedia broadcasting mobile television platforms. They also agreed to expand transfer of technology and human resources, and that more Korean companies will participate in Qatar's state-initiated IT projects.

Daegu, the country's third largest city with a population of 2.5 mil, has been chosen to host the 2011 World Championships in Athletics. Against strong rivals Moscow and Brisbane, the International Association of Athletics Federations meeting in Mombasa, awarded the sports event to the little-known Daegu. Korea now joins an elite group of countries to have hosted the top 3 international sports events, the Summer Olympic Games, the World Cup and the World Championships in Athletics, following only 7 countries achieved the feat, such as Italy, Japan, Germany, Sweden, Spain and France.
Bringing home to Korea the first gold and bronze medals in 400 m and 200 m free style at world swimming competition, Park Tae-hwan, an 18-year-old high school student, has emerged as Korea¡¯s national hero, but he failed to come to final in 1500 m freestyle, his signature event.

NORTH KOREA AND NATIONAL DEFENSE

Testing the patience of the other members, NK bolted out of the six-party talks, saying that it cannot discuss nuclear issues until the NKorean funds from the Macau bank are transferred back to the owners. The move has brought an unexpected setback to the nuclear negotiation process.
The money, $25 mil, was transferred to Bank of China from Banco Delta Asia in Macau, but problem is BOC has refused to release reportedly on the concerns that handling the cash with NK would hurt its credit rating. USA suggested that BOC may transfer the money to a third country to be sent to NK, or NKoreans will be able to travel to China to pick up the money.
The 6 way talks made agreement last month after 3 years of tortuous negotiations, sets out a schedule that the frozen NKorean funds will be recovered within 30 days of the agreement. The funds would be used for education and humanitarian purposes, as proposed by NK. NK is to shut down its nuclear facilities at Yongbyon within 60 days and have the closure verified by IAEA monitors within that timeframe.
The general in charge of US forces in SKorea remained wary of NK¡¯s intentions, despite the North's recent agreement to begin dismantling its nuclear weapons programs, as NKorean leader Kim Jong-il has a long history of manipulating negotiations over his nuclear program for his regime's gain. He supported the recent six-nation disarmament deal, but he saw no signs that NK would reduce its huge military spending or curb its efforts to split the USA-SKorean alliance.
The Pyongyang-Tokyo talks in Hanoi were suspended hours after they opened. Japan demanded a reinvestigation into some of the 17 people on its list of those kidnapped in the 1970s and 1980s because they were not accounted for. But NK, who in 2002 admitted to kidnapping 13, insisted that the case was closed. In response, Japan made it clear there would be no normalization unless the case was addressed again.
International Atomic Energy Agency head Mohamed ElBaradei was invited by NK to visit Pyongyang , for the first time in 15 years, for 2 days to discuss the inspection of NK's nuclear programs. ElBaradei told that Pyongyang reassured him of its promise to follow the Feb agreement was "looking positively to come back to the agency."

Lee Jae-joung South Korea's unification minister, led the delegation to visit NK to negotiate how to resume aid, family reunion events and inter-Korean economic projects in their first high-level talks in 7 months. Both Korea agreed to resume reunions for families and make test runs of cross-border trains in the first half of this year. SKorea will provide 300,000 tons of fertilizer and 400,000 tons of rice to the North in time for spring rice planting. They also agreed to discuss the South's rice aid for the North when they hold a new round of economic talks in Pyongyang on April 18-21. The timing was set apparently to wait and see if NK fulfills its promise to take initial steps toward nuclear disarmament by the April 14 deadline, 60 days after the signing of the six-nation agreement in Beijing on Feb 13. The ministerial talks had been suspended amid tension over NK's missile tests in July and its nuclear weapon test in Oct. 2 Koreas have agreed to restart the construction of a family reunion center at Mt Geumgang and to arrange more family reunions via video links, which will be used for people who are too old to travel for face-to-face reunions.
Hundreds of North and South Koreans held tearful reunions via video. The reunions come weeks after 2 sides agreed at high-level talks to put their relations back on track. 2 sides set up 13 studios, one in the North's capital Pyongyang and 12 in the South's 9 major cities for the video reunion event. Millions of Korean families were separated following the division of the Korean Peninsula in 1945 and the 1950-53 Korean War. In 3 days of video meetings, each family was given 2 hours to see and talk to their relatives via a video.

The Defense Ministry began a $2.5 bil project this week to acquire 20 new advanced fighter jets between 2010-2012 to reinforce airstrike capabilities. Korea invites foreign aircraft makers, including US Boeing, France's Dassault Aviation, Russia's Rosvoorouzhenie and Eurofighter International, to participate in the Air Force's fighter jet program in the bidding process.
Korea and US military authorities have agreed to jointly develop guided rocket weapons with the investment of KW60 bil aiming to upgrade both navies' 70-mm unguided air-to-air or air-to-ground rockets, with a guidance system and infrared-ray-image research system, enabling Navy helicopters to use the rocket for destroying enemy hovercrafts and speed boats.
The Korean military endorsed a plan to develop satellite-guided missiles by 2012 to upgrade its precision strike capability. The military will spend KW43 bil for the development due by 2020.

The Korean government is looking into the prospect of expanding military hardware exports, including supersonic jet trainer, the T-50, or Golden Eagle. The cooperation between Korea and Indonesia expanded to nuclear power development and defense industry-related projects. The government is believed to have agreed with the Indonesian to cooperate to build 2 submarines for $750 mil, and 2 small-scale destroyers worth $150 mil. The government aims to increase annual defense industry exports to more than $1 bil. The T-50 was selected by the UAE as one of 3 candidates for its next-generation jet trainer project. Under the acquisition program, the UAE plans to purchase 40-60 aircraft, estimated to cost $2-3 bil.

The conservative GNP has made a fundamental change to its hard-line approach to NK in light of improving relations following the latest breakthrough in the nuclear talks. The GNP had opposed the Roh administration's business exchanges and humanitarian aid, arguing that such friendly gestures "spoiled" the North. GNP formed a task force to prepare new NKorean policies that would encompass its new position on inter-Korean summits, the joint Gaeseong industrial park and other business activities with the North. The GNP is reported also considering changing its stance and support the government's plan to reassert wartime military control from USA by 2012. The GNP and its presidential hopefuls had strongly opposed the transfer plan until recently for fear of creating a security vacuum and weakening Korea's alliance with Washington.

NK is facing one of its biggest food shortages of the past decade with millions of people going hungry because of a bad harvest last year. NK has relied on foreign food aid since natural disasters and mismanagement devastated its economy in the mid 1990s and led to a famine estimated to have killed some 2 million people.
NKorean defectors are to be able to obtain court approval to divorce spouses residing in the North and remarry in SKorea, as a new law came into effect. Existing family law stipulates that an individual seeking divorce must undergo court arbitration with the couple in attendance. A special provision to the law allows the court to proceed with divorce cases only if the petitioner proves that his or her spouse is not residing in SKorea. The court suspended decisions for the remaining 223 cases because of the law.

ECONOMY AND POLICY

The real GNI advanced 2.3% in 2006 on year, while Korea's GDP grew 5%. Per-capita GNI came closer to the $20,000 mark, driven by KWon's continued strength against the USDollar. It stood at $18,372, up 11.9%. The per-capita income of Koreans had plunged below $10,000 in 1998 amid the Asian financial crisis but since then has been on a solid recovery path. It rose from $11,499 in 2002, $12,717 in 2003, $14,206 in 2004 to $16,413 in 2005.

Korea's export growth accelerated more than expected in March, climbing 14% on year to $30.6 bil, after rising 10.5% in Feb. Imports increased 12.1% to $29.1 bil, resulting in a trade surplus of $1.5 bil.
Korea's current account surplus fell from $28.2 bil in 2004 to $15 bil in 2005 and dropped further to $6.1 bil in 2006, while Taiwan's came in at $25.1 bil up 56.88% on year in 2006, Singapore reported a 26.23% surplus growth in 2005 and 9.34% in 2006, with no need to mention about Chinese.
Korea's fiscal deficit has deepened for 3 years in a row, reaching KW10.8 tril ($11.5 bil) last year. After posting a surplus of KW1 tril in 2003, the adjusted fiscal balance fell further into the red from minus KW4 tril in 2004 to minus KW8.1 tril in 2005.

State auditors, the Board of Audit and Inspection, recommended the Korea's financial regulator take appropriate action to rectify its approval of US equity firm Lone Star Funds' takeover of Korea Exchange Bank in 2003. BAI, after its year-long probe, concluded that the Financial Supervisory Commission's endorsement of the deal was improper and can be nullified, because it was based on financial data that inflated the bank's losses, and the Lone Star was not qualified to take over the bank, as nonbanking companies are not allowed to buy a controlling stake in a bank more than 10%. BAI also urged to sanction Morgan Stanley, for its involvement in under estimating the value of KEB. The BAI's recommendation is nonbinding, however, the FTC promised to review the recommendation. The Lone Star bought a 51% stake in KEB for KW1.4 tril in 2003 in the largest-ever deal in Korea's financial industry. If the 2003 deal is declared void retroactively, the buyout fund will have to dispose of its holdings that exceed a 10% stake. Lone Star currently owns a 64.6% stake of the lender. It scrapped a $7.3 billion deal to sell KEB to Kookmin Bank last Nov.
Lone Star Funds chairman John Grayken rejected accusations by BAI. A parliamentary committee adopted a resolution calling for the cancellation of Lone Star's purchase of KEB in 2003 and the punishment of officials involved in the deal.

The Industrial Bank of Korea plans to set up a Chinese subsidiary to enter the Chinese banking market for small- and medium-sized enterprises. In the face of stiff competition in their home market, Korean banks are eyeing the fast-growing Chinese  market, planning to break into the country's retail banking segment. Woori Bank was the first Korean bank to plan to set up a Chinese subsidiary. Hana Bank followed.
Citibank targets to increase a market share of 10% in Korea, up from its current share of 5-6%. The bank is currently Korea's sixth largest with 248 branches nationwide.

The Korean government sold KW625 bil ($662 mil) of 10-year inflation-linked bonds at a yield of 2.82%, the first of the kind, joining a global trend to protect investors against rising consumer prices. It will sell the same amount of bonds every quarter and plans to issue KW2.5 tril debt in 2007, about 5% of total bond sales. KDB also plans to sell about $1 bil of bonds at the rate of the senior unsecured debt A.
The World Bank will manage $1 bil of Korean pension funds invested overseas and provide consulting and training. The World Bank will provide global investment capabilities to the pension service, which is seeking to diversity its portfolio. Korea's pension fund is one of 5 largest in the world with assets of some $200 bil.
Korea's National Pension Fund, the country's biggest institutional investor, plans to boost its holdings of stocks and overseas assets and cut bond holdings to raise returns, as the yield on Korean 3-year government bonds almost halved since the end of 1999. The fund had about $202 bil in assets as of the end of last year, of which 78.1% was invested in local bonds and 8.7% in overseas debt, mostly US Treasuries.

Korea signed a long term LNG supply deal with Qatar¡¯s Rasgas. State-run KOGAS will receive 2.1 million tons of LNG per year from 2007 to 2026. The amount will total up to 42 million tons. Qatar is the top gas supplier to Korea, providing 27% of the 24.6 million tons of LNG imported last year.
SK Corp, Korea's biggest oil refiner, plans to invest $592 mil by 2011 in Peru's LNG project, securing a 30% stake in Peru LNG Co. Deliveries are due to start in mid-2010.

CHAEBOL

Cho Suck-rai, 72, chairman of Hyosung Group, was elected as the chairman of the Federation of Korean Industries. His appointment ended 40 days of turmoil at the FKI over who should head the association. Chairmen of the FKI, once called as the president of industry, has wielded influence, with government and enterprise, commanding respect from the corporate world. Legendary tycoons, such as the late Lee Byung-chul, founder of Samsung, and the late Chung Ju-yung, founder of Hyundai Group, once headed the organization. Cho pledged to lead a resurgence and bring unity to the FKI, saying that Korean industry is being sandwiched between Japan and China, and need to bond together to overcome current difficult situation.

The Korean government is not considering allowing domestic industrial groups to increase their shareholdings in banks, while Lawmakers from the ruling and opposition parties want to ease the laws so Korean investors can compete with foreign investors. Korea has prevented large conglomerates from owning commercial banks. The law allows foreign investors and local financial institutions to acquire up to 10% of the voting rights and a stake of 10%, while non-financial industries can own just 4%.

Samsung Electronics Co has begun mass production of 60-nanometer, 1-gigabyte DRAM and put to the market in 2008, expecting demand for the memory chip to surge with the rising demand in the coming years. The market volume of the 60-nano DRAM is expected to reach $32 bil in 2009 from $2.3 bil in 2007.
SEC was included in the world's 50 most admired companies picked by Fortune magazine. SEC ranked 34th and was the only Korean company to make the list. The top place went to GE, followed by Toyota Motor, Procter and Gamble, Johnson and Johnson, and Apple.
SEC plans to invest 320 mil euros to build an LCD factory in Slovakia, near Trnava, starting production in March 2008. The plant will produce 10 million LCD modules a year by 2012, with expected yearly sales of 80 billion koruna ($3.1 bil). 7 SEC suppliers will also build factories in Slovakia, investing an additional 10 billion koruna.
SEC unveiled a new fusion semiconductor that it claims to reduce chip costs by up to 50% while offering even higher performance. It is a third-generation fusion memory chip. Named "Flex-OneNAND," it combines the fast reading and writing capability of an SLC flash memory chip, mostly used in mobile phones. SEC plans to begin production from next month, aiming to reach a sales target of $100 mil by 2008 and $1 bil by 2012. SEC agreed to supply $373 mil worth 3G mobile system to Mobile-8 Telecom of Indonesia during 2007-11. SEC secured 10% market share in global Hard Disc Drive and becomes fourth largest supplier, following Sea Gate of 33.1%, Western Digital 19.6%, Hitachi 16.1%.

Hyundai Motor Co plans to invest $270 mil to build a second engine plant in Montgomery, Alabama, to mass-produce the smaller engines from Sept 2008. HMC, the world's sixth largest automaker, picked Montgomery in 2002 for its first assembly plant in USA.
Hyundai-Kia Automotive Group signed a strategic partnership with Infineon Technologies AG, a German semiconductor maker, the world's second largest manufacturer of automotive semiconductors, for research and development of car electronics technologies. HMC will establish a joint research center within its headquarters in southern Seoul.
3 affiliates of HMC are being investigated by National Tax Service after the conviction of Chairman Chung Mong Koo. The officials visited offices of car-shipping unit Glovis, car audio-making unit Hyundai Autonet and construction subsidiary Emco Corp, demanding documents. Chairman Chung and his son hold a combined 60% stake in Glovis. Emco is closely held by the chairman, his son, Kia Motors and Hyundai Mobis. Hyundai Motor, Kia Motors and Glovis have a combined 32% stake in Hyundai Autonet.

LG phones is to come pre-installed with Google services from the second half of this year. The LG-Google handsets will be shipped globally to USA, Europe and Asia. At least 10 new handset models are planned for this year. The handsets will support Google applications, including Google Maps, Gmail and Blogger Mobile. Earlier this year, SEC launched a new handset with Google search and e-mail applications.

Lotte Group launched its China holding company, named Lotte (China) Investment Co with $30 mil capitalization, setting a goal to attain $1.1 bil in sales in the Chinese food market by 2016.
Pyeong San Co, a maker of wind turbine metal parts, secured strategic investment amounting to KW62.4 bil ($66.5 million) from Goldman Sachs, aiming to expand in China and add manufacturing capacity. Goldman Sachs has made over $1.5 bil in investments in the alternative energy sector worldwide, and its portfolio includes Houston-based Horizon Wind Energy and Nordex AG in Germany.

POSCO was reported to increase the amount of shares owned by friendly league to 50% from current 41% to prevent Arcelor Mittal from M&A, while Arcelor Mittal expressed not to pursue a takeover of POSCO.
Companhia Vale do Rio Doce, the world's second largest Brazilian mining company by market value, opened an office in Seoul. POSCO has been CVRD's partner since their first iron ore contract was signed in 1976. In 9 months to Sept last year, CVRD's sales to POSCO totaled about 9.6 million tons. POSCO has a partnership with CVRD in the Kobrasco pelletizing plant, with an annual production capacity of 5 million tons. Recently, CVRD agreed with Hyundai Steel to supply iron ore and pellets from 2010 when Hyundai's new integrated steel mill starts operations. With Dongkuk Steel, CVRD is developing the Ceara Steel slab plant project with annual production capacity of 1.5 million tons from 2009. CVRD and LS Nikko, one of the world's biggest copper smelters, have a long-term contract for the supply of copper concentrates from the Sossego mine.

Korea is eyeing a second boom in Middle East. Korean contractors expect $18 bil overseas construction order this year, contrasting sluggish domestic market. They expects more than $3 bil from Saudi Arbia alone.
HHI expects to sign the contract in April for $1.1 bil worth 2700 MW Power Plant for Yanbu-Marafiq Electric Co, Daelim got the order in Jan from Kayan, subsidiary of SABIC, to build policarbinate petro chemical plant worth $1 bil, Samsung had $400 mil worth polyprophilen plant from Kayan and Hanhwa secured a petrochemical plant from SAFRA at $500 mil in Feb.
SK Group signed MOU with the Saudi Arabian state investment agency, SAGIA, to build an Ubiquitous City in Saudi Arabia.
SK Engineering & Construction received a $624 mil order from Kuwait Oil to build a crude-oil gathering center which was destroyed by Iraqi invasion. The facility will be able to produce 165,000 barrels of crude oil a day and will take 42 months to build.
Doosan Heavy Industries & Construction has received a $1.2 bil order from Dubai Electricity & Water Authority to build a power plant in Jebel Ali in Dubai for the completion in March 2010. It is the biggest power plant deal ever clinched by a Korean company. Doosan Heavy, in Dec, won 2 separate contracts, together worth $680 mil, to construct power plants in Oman and the UAE.
GS Engineering and Construction Corp received a $7.2 mil contract with Oman's state-run Salalah Methanol Company, to build a methanol plant in Salalah to start production in Feb 2010, expecting the production of 3,000 tons of methanol a day. In
Oman National Oil Corp signed MOU to invest $30 mil to construct a LNG Power Generation plant in Chungnam Province.
 
MONETARY AND ECONOMIC INDICES

Korea Stock Price Index has steadily recovered its energy through the month. It started weak at 1414, fell to 1376, as a global stock market showed no sign of relenting on rising US subprime mortgage delinquencies, then fluctuated for a while and gradually recovered to end the month at 1452. Foreign investors held 37.3% of the shares of $282 bil on Korea's main bourse at the end of 2006, the ninth-highest among the world's top 33 stock markets.
The exchange rate of Korean Won against USDollar kept stable in the box 945-937 in March. The reserve of foreign exchange in Korea increased by $1.1 bil to $243.92 bil in March.
Korean producer prices increased at a faster pace in Feb by 1.7% on year compared with Jan's 1.5% gain. Consumer-price inflation accelerated to 2.2% in Feb, which is still below BOK's target range of 2.5-3.5%. BOK left interest rates unchanged at 4.5% for a seventh month. The yield on the benchmark five-year bond rose 0.01%, to 4.81%. The yield on 3 years corporate bond has been stabilized through the month in the range 5.24-5.19-5.24-5.19%. Korea's jobless rate dropped to 3.2% in Feb, the lowest in more than 4 years, from 3.3% in Jan.
 
SHIPBUILDING AND SHIPPING

Korean Big 3, HHI, SHI and DSME, are optimistic to receive $30 bil worth new building orders this year, with individual targets of HHI¡¯s $12.8 bil. SHI¡¯s 10-11 bil and DSME¡¯s $10 bil. They have received orders worth $37.85 bil last year.
Chinese shipbuilders have won the order of 3.8 mil CGT in Feb, out of total global order of 7.8 mil CGT, becoming the first in the world in receiving orders for 2 consecutive months.
In an effort to match the production with its growing order book, DSME decided to buy Shinhan Machinery, Ulsan-based builder of structures for the offshore industry and industrial plant equipment, as well as fabricator of ship blocks, deckhouses, engine casings and funnels, mainly supplied to HHI.

HHI secured orders from Eukor Car Carriers for 4 x 8,100 PCTCs and Taiwan Maritime Transport 3 x 318K VLOOs. HMD received the orders from Grimaldi Group and others to build 21 x 2,000 cars-2,000 lane metres-800 teu roro in a week and European owner 4 x MR pc. Hyundai Samho got from Marseille Fret for 1 x 1700 teu and ZIM 2+1 x 10,000 teu container ships.
HHI received orders worth $50 mil to supply a total of 559 industrial robots and facilities for Hyundai Motor's factories in the Czech Republic and China. It sold a total of 1,230 robots in 2006 and plans to raise sales to 1,800 this year. HHI aims to increase its annual production capacity by more than five-fold to 10,000 by 2010.

DSME Mangalia took the orders from Angelicoussis group for 4+2 x 180K bulkers. SHI signed the contract to build a drillship, Flex LNG 2 x 90K LNGC, Geden Lines 2 x 115K tankers, Teekay Shipping 2 x 109K and Yasa Shipping 3+2 x 158K tanker.
STX was awarded by Formosa Plastic 2 x 74K pc and STX PO 2 x 46K pc for its Chinhae yard, and Benelux Overseas + Syprus Ocean Tankers Holding 4 x 13K chemical tankers, Ocean Tankers Holdings 2 x 12K chemical tankers in its Busan yard. STX Dalian yard secured orders from Anangel Maritime Service for 6 x 181K bulker and STX Pan Ocean 4 x 6,700 PCTC.

Hanjin made agreement with Danaos for 5 x 6500 teu container vessels and Hanjin Subic Bay with Transman Shipping 4 x 175K bulker.
Sungdong delivered first ship since established in 2004, when it handed over 2 x 93K bulk carrier to Marmaras. SPP agreed with Yasa Shipping for 4 x 50K tankers, Dunya 4 x 113K tanker and Roxana 3 x 74K tanker. 21 Century got the orders from an Asian owner for 2 x 13K chemical carrier, Nokbong with Heung-A 1 x 12.6K chemical tanker,

Korea Line Corp reportedly made a big 57K supramax-bulker charter deal with 9 newbuildings from the market for long-term periods. The first 6 ships have been taken for 5 years at between $18,000-18,500 per day for the deliveries between 2009-2010 from China. KLC is understood to have concluded another 3-4 supramaxes with the deliveries between 2010-2011 also from China, with the rate in region of $16,000 PD. KLC keeps the fleet of total about 70 vessels.
SK Shipping decided to take 100% stake in Stella Shipping, its own LNG transportation arms, after acquired 20% share from Itochu.
Heung Ah Shipping established Heung Ah Logistics, increasing the subsidiaries to 20 from 19.
HMM plans to raise its stake in a group financial brokerage Hyundai Securities in an effort to deflect any possible hostile takeover bids. The total amount for the share purchase could reach KW140 bil within a year, pushing the stake up to almost 21%.
Shareholders of Hyundai Merchant Marine rejected HMM¡¯s proposal to issue new shares to specific financiers. The shipper has tried to issue new stock to friendly investors in a bid to further finance its upcoming takeover bid for Hyundai Construction. HMM also hopes the sales would help the company gain greater leverage against the mounting takeover threats from HHI. HHI, Hyundai Samho, KCC Corp and some minority shareholders opposed the plan.