The aim of this research is to review strategic policies on creating a logistics hub in the GCC which includes infrastructure and hinterland development, and to suggest government policies to enhance industrial and logistics cooperation between Korea and GCC countries. In particular, logistics hub policies being promoted in Saudi Arabia and UAE are analysed as case studies to elicit implications for future government policies.
To summarize research outcomes produced in each chapter, chapter 2 examines government policies for economic diversification and the background of said policies, along with economic role of the logistics hub. The oil and gas sector in the GCC countries represent about 40% of GDP with the manufacturing sector accounting for about 10%, which shows that GCC economies are highly dependent on the oil and gas sector. Economic diversification policies are designed to reduce the degree of dependence on the hydrocarbon sector.
In other words, they are being implemented to increase production and exports by non-hydrocarbon sectors, and ensure sustainable economic growth and stable employment that provide good income.
It should be noted that a logistics hub with infrastructure and industrial base should be understood as the foundation for economic diversification.
Chapters 3 and 4 examines policies of Saudi Arabia and UAE for promotion of logistics hubs. Competitiveness of the logistics sector of Saudi Arabia is within the average range of GCC countries, and still burdened with inefficient procedures and trade restrictions. Saudi Arabia, however, continued to develop ports, airports and railways with close links to Industrial and Economic Cities.
The government is making efforts to induce foreign direct investment in the logistics hub including promotional incentives for multinational corporations in the Cities.
UAE showed the best performance in terms of logistics among the six countries of the GCC, including trade related institutions and regulations. Although the size of its domestic market is small, UAE became the largest re-exporting country with the help of well-established infrastructure and free trade zones in Abu Dhabi and Dubai.
Chapter 5 suggests government policies to upgrade industrial and logistics cooperation between Korea and the GCC countries. First, the logistics sector should be considered in connection with industrial sectors, as logistics hubs have been developed as tools for economic diversification. In other words, free trade zones and industrial cities should be explored as a productive platform to add value to the products exported from Korea.
Second, logistics hubs in the GCC countries could be used as a base to(re)export Korean products to the Iranian market after international sanctions against Iran are removed. Moreover, Iran can serve as a waypoint to Central Asian countries through Turkmenistan, and the Caucasus region through Azerbaijan, creating more logistics demand.
Third, investment by Korean companies is necessary for the establishment of joint ventures between Korea and GCC countries in logistics-related business activities. They could invest in projects incorporating processing facilities in the free trade zones and logistics infrastructure. For these investment projects, various financial support scheme should be developed by Korean and GCC financial institutions including some sovereign wealth funds for development.
Fourth, logistics information platform should be established in major logistics hubs in the region, for Korean companies seeking information on logistics demand and cooperative partners in the GCC market. This will facilitate, particularly, the entry of small and medium sized enterprises into the market.