Korea Petroleum Association Chairman Park Joo-sun, who leads the new Korea-Saudi Arabia Industry and Trade Association, speaks during the association's founding ceremony at the Korea Press Center in Seoul, March 5. Yonhap

Korea's 62-year-old business relationship with Saudi Arabia is expanding beyond the traditional sectors of construction and petrochemicals. Bilateral efforts are now underway to develop new projects in areas such as smart cities, clean energy, and future mobility.

Following President Yoon Suk Yeol's state visit to Riyadh last October, numerous bilateral deals were struck, elevating the atmosphere for exchanges. These agreements paired Korean firms with technological expertise with urban development projects in the desert country, aiming to enhance local infrastructure and digital platforms for optimal efficiency amid the kingdom's challenging climate conditions. Notably, NEOM, the world's largest city development project, serves as a prime example of where these exchanges are unfolding.

Capitalizing on the burgeoning bilateral relationship, a group of Korean entrepreneurs recently inaugurated a new organized body named the Korea-Saudi Arabia Industry and Trade Association (KOSAA). Led by Korea Petroleum Association Chairman Park Joo-sun, KOSAA seeks to bolster the Korean government's trade initiatives concerning Riyadh.

With congratulatory remarks from Yoon and NEOM's CEO Meshari Almutairi during its founding ceremony in Seoul on March 5, KOSAA has heightened expectations that Korean companies will encounter more investment opportunities and reap increased benefits. KOSAA intends to send officials to Riyadh in May to sign additional NEOM development deals .

President Yoon Suk Yeol talks with Saudi Arabian Crown Prince Mohammed bin Salman at Al Yamamah Palace in Riyadh, Oct. 22, 2023. Newsis

"Before the organization's launch, we dedicated a year to visiting Riyadh and engaging with local authorities to confirm the sincerity of our commitment," a KOSAA official said. "CEO Meshari's greeting at the ceremony reflected Saudi Arabia is betting big on Korean firms and entrepreneurs."

During Yoon's recent visit to Riyadh, a remarkable 51 business deals and MOUs were secured, amounting to a total of $15.6 billion. Notably, Hyundai Motor Company inked an agreement with Saudi Arabia's Public Investment Fund (PIF), under the leadership of Crown Prince Mohammed bin Salman, to invest $400 million in constructing an assembly plant in Saudi Arabia. Additionally, Korea Electric Power Corp, POSCO Holdings, and Lotte Chemical signed agreements with Saudi state-run petroleum and natural gas company Aramco for blue ammonia production projects.

The comprehensive deals follow the crown prince's high-profile visit to Seoul in November 2022, which prompted the heads of major Korean conglomerates to converge at Lotte Hotel Seoul, where a series of meetings culminated in the signing of trade deals worth $29 billion.

Major Korean firms are actively expanding their presence in Riyadh. Naver, South Korea's largest online search engine and IT powerhouse, recently exhibited its latest technologies at LEAP 2024 in Riyadh, a global IT exhibition.

Samsung Electronics Executive Chairman Lee Jae-yong, front, checks Samsung C&T's tunnel construction site at NEOM in Saudi Arabia, Oct. 1, 2023. Courtesy of Samsung Electronics

Under the concept of a "global tech convergence company," Naver showcased its generative artificial intelligence (AI) HyperCLOVA X, alongside its cloud computing, robotics, autonomous driving, and digital twin technologies. Naver Labs CEO Seok Sang-ok delivered a keynote speech on ARC mind, the world's first web-based operating system for robots. Additionally, Naver signed an MOU with Aramco Digital to promote digitalization across the Middle East and another MOU with Saudi Public Transport Company to introduce an AI traffic control system.

Construction projects in Saudi Arabia highlight the robust presence of Korean firms in the region. In 2023, these projects collectively amounted to $9.5 billion, marking the highest figure since 2013, when it almost reached $10 billion. Throughout the history of bilateral relations, over 330 Korean firms have secured more than 1,860 Saudi projects, totaling $166 billion. This accounts for the highest portion of Korea's overseas construction projects, at 17.2 percent.

In overall bilateral trade, Korea's imports surpass exports. Despite a bilateral trade volume of $38 billion last year, Korea exported $5.3 billion while importing $33 billion. Mineral fuels, mineral oils, and products of their distillation constitute the largest portion of imports, with inorganic and organic chemicals, aluminum, and copper following in smaller volumes.

Korea seeks bigger role in NEOM project

At the center of the ongoing bilateral cooperation is NEOM, an urban district in Saudi Arabia's northwestern province of Tabuk where a new smart city is being built by global firms with certified technologies and practices, including Korean companies.

Samsung C&T and Hyundai E&C are now tunneling underground beneath The Line, a linear city that is 170 kilometers long and 200 meters wide within NEOM. Project management company Hanmi Global has won seven deals for projects to improve the city's traffic and environmental monitoring and build dormitories for 70,000 construction workers there.

Other business opportunities remain open for Korean firms as the city also plans to complete Sindalah, a nearby island to be redeveloped as a yachting and luxury travel community, Oxagon, an industrial complex in southern NEOM that is fully integrated with automated ports and a supply chain, and Trojena, a mountainous tourism destination for skiing and adventure sports year-round.

NEOM consists of Sindalah, Oxagon, Trojena, The Line, Gulf of Aqaba projects and preserved ambient nature. Courtesy of NEOM

As part of Saudi Arabia's Vision 2030, which emphasizes transitioning from petrochemical to eco-friendly initiatives, NEOM organized its inaugural Asian exhibition in Seoul in July 2023. At the event, 400 leaders of Korean firms convened to network with NEOM officials. Discussions centered on the shared prospect that smart cities, currently under development in Busan and Sejong as part of the Korean government's pilot projects, will also be realized in NEOM.

Discussions are currently ongoing for additional joint projects as an extension of NEOM. Plans include the creation of digital twins for five Saudi cities, while PIF and Korean firms are planning a consortium to carry out modular and automated solutions for construction projects.