Bilateral economic relations between South Korea and Iran are expected to take another big leap forward following South Korean President Park Geun-hye's historic trip to Tehran in early May.
Through a string of meetings between Park and her Iranian counterpart Hassan Rouhani and other Iranian top officials, the two countries agreed to widen cooperation in trade, investment, construction, financial services and other economic areas.
While industry watchers paint yet another rosy outlook over Seoul-Tehran ties, the history of friendship dates back to 1962 when the two established their diplomatic relationship, Yonhap News Agency reported citing industry watchers and corporate officials.
Seoul kicked off its diplomatic mission in Tehran in 1967, while Iran also opened its embassy in Seoul eight years later.
South Korea, then a young country struggling to rebuild itself from the ruins of the 1950-53 Korean War that ended with only a ceasefire armistice, sent tens of thousands of workers to Iran through 1979 to earn foreign currency for South Korea's economic development.
Such a partnership paved the way for South Korea to emerge as Asia's fourth-largest economy today, industry watchers said. During the 1973 global oil crisis, Iran was also the only supplier of oil to South Korea, which helped the country's growth engine keep running.
Likewise, for a long time, Seoul and Tehran were more than just business partners. Their friendship has eventually reached out to other areas, expanding cultural exchanges as well.
As the symbol of the brotherhood, South Korea's flourishing capital city named one of its streets at the posh Gangnam district located in southern Seoul as "Tehranno," literally meaning "Tehran Street."
The street full of skyscrapers is now considered to be the hub of South Korea's information and communications technology industry, one of the key pillars of the country's economy. In response, Tehran also opened a street named after Seoul. Tehran opened Seoul Park in 2003.
During the years Iran was under western sanctions over its nuclear program, the economic engine of the two countries remained rather intact and South Korean workers still stayed in Iran, lending support to the economic development of both Seoul and Tehran.
POSCO Daewoo Corp., formerly Daewoo International Corp., has been in Iran amid the changing international atmosphere since 1975.
South Korean builder Daelim Industrial Corp. also stands as a symbol of the strong economic ties of the two countries. Since 1975, Daelim has clinched $4.5 billion worth of projects over the past 40 years.
Daelim also started a project to build a gas refinery in Kangan, 2,200 kilometers from Tehran in 1984, which lasted for six years and four months.
Despite the geographical difficulties coupled with the Iran-Iraq War, Daelim struggled to complete the project on schedule, vowing to keep its commitment with the business partners.
Industry watchers say the biggest asset of Seoul-Tehran relationship is the never-changing credibility that persevered through geopolitical situations.
On the back of the efforts, South Korea and Iran now stand as key economic partners.
> Full-Fledged Business Cooperation
Park's latest visit to Iran also gave a new push to full-fledged business cooperation between the two countries.
About 230 South Korean business leaders and Cabinet ministers, who accompanied Park on her Tehran visit, signed a large number of deals, which included cooperation in railroad and dam construction, gas field development, maritime transport, customs affairs and the establishment of a euro-based settlement system aimed at making it more convenient to carry out trading.
Moreover, Korean Air Lines will launch a direct flight between Seoul and Tehran later this year, while leading South Korean business associations, such as the Korea Chamber of Commerce and Industry, and commercial banks will open offices in the Iranian capital.
All in all, 59 preliminary deals were signed for economic cooperation during Park's Iranian visit, according to her office.
"(Iran) could become a huge breakthrough for their (South Korean) exports," Oh Jung-kun, a professor at Konkuk University in Seoul, said. "At a time when our exports to China are projected to shrink a lot, it is expected to fill up the void to a significant extent."
South Korea once enjoyed active trading with Iran, but it has dropped significantly after trade with the Middle East country was restricted following international sanctions.
Industry data showed that trade volume between South Korea and Iran stood at $6.1 billion in 2015 (with South Korean exports at $3.7 billion and Iran’s at $2.3 billion), compared with $17.4 billion in 2011. Iranian President Rouhani noted that he wants to boost bilateral trade to $18 billion in the coming years.
The optimism might be based on signs of Iran’s fast economic growth. A World Bank report earlier forecast that the Iranian economy will grow 5.1% and 5.5% this and next year, respectively.
Second Mideast Boom
"All the things that we have achieved (through the president's visit to Iran) will likely serve as a chance for us to preempt the Iranian market seen as an integral part of the second-round of the Middle East boom," said An Chong-bum, senior presidential secretary for economic affairs.
"A foothold has been secured to help us return to the pre-sanctions trade level."
The first Middle East boom refers to the rush of South Korean firms and workers to the region in the 1970s.
As Iran boasts the world's fourth-largest known crude oil deposits and ranks No. 1 in terms of natural gas reserves, it is vital for South Korean firms to tap deeper into the Iranian market to expand their presence in the Middle East.
Daelim Industrial said it plans to sign $8.1 billion worth of deals in Iran soon, including the construction of dams and railroads.
Daewoo Engineering & Construction Company, a major South Korean builder, said it has won a tentative deal to join a large-scale infrastructure construction project in Iran. It signed a memorandum of understanding with Bahman Geno Company, a local energy company, promising to cooperate in building a refinery plant for about $10 billion.
"The presidential visit paved the way for South Korea to clinch a combined deal worth 50 trillion won (about $43 billion)," an official from International Contractors Association of Korea said.
On Wednesday, Park called on South Korean business executives to ensure that they can sign formal deals with their Iranian counterparts. She described economic achievements from her recent trip to Mexico and Iran as "just a beginning" and asked business executives to take follow-up measures such as signing formal deals.
Speaking during a meeting with hundreds of officials, business leaders and executives who accompanied her during her Iran visit, Park vowed to provide all resources to South Korean companies to help them win infrastructure projects.
