[The Korea Herald] South Korean diplomats seek new land deal in Madagascar for Daewoo Logisitics

 

 

This article first appeared in The Korea Herald in February 2013.

A laborer holds up an ear of corn during harvest on a farm in Africa in this undated file photo. (AP-Yonhap News)
A laborer holds up an ear of corn during harvest on a farm in Africa in this undated file photo. (AP-Yonhap News)


After embarrassing reports implicated the country in a corrupt land deal, South Korea’s Ministry of Foreign Affairs and Trade is exploring ways to re-open commercial opportunities for Korean investors in Madagascar.

It could mean food security and biofuel exports worth billions of dollars for one of Asia’s largest economies ― indeed, more than half of all imports of corn for South Korea, which is the world’s third-largest importer of the crop.

In anticipation of new elections slated for the first half of 2014, South Korean diplomats are working hard to help Daewoo Logistics regain the huge land deal it lost after a 2009 coup d’etat in the island For starters.

South Korea is looking to open a diplomatic mission in Madagascar, said the director of the ministry’s Africa division.

“I assume Daewoo still wants to make a deal, but I have not contacted them in a few days,” said Moon Sung-hwan, Africa Division director at the Ministry of Foreign Affairs and Trade.

Daewoo made headlines around the world in 2009 when its subsidiary, Madagascar Future Enterprise Corp. (MFE Corp.) inked a 99-year lease for 3.2 million acres, half of Madagascar’s arable land, to grow palm oil and corn for biofuels and for shipment back to Korea as food crops.

The Madagascar deal would have been the biggest involving foreign firms seeking to secure African farmland since food prices soared in 2008.

Mamy Rakotondrainibe, an activist in Madagascar who blogs extensively about land issues, accused authorities there of re-engaging in negotiating for a new deal with MFE general manager Kim Kwon-il.

Moon said the ministry was interested in opening a diplomatic mission to help Daewoo and other companies interested in investing there.

“We have many interests there in addition to Daewoo Logistics,” he said, adding that it was too soon to say exactly when an embassy would be established.

“Madagascar is rich in agricultural land and natural resources, and many Korean companies are interested in doing business there,” Moon said.

In addition to Daewoo Logistics, Korea has a major stake in what could become the world’s largest nickel mine, Canada’s Sherritt International Corporation and its Korean and Japanese partners received permission in September to begin output with a production capacity of 60,000 tons of refined nickel annually for the next 30 years.

The future diplomatic mission would be led by a charge d’affaires reporting to Korea’s embassy in South Africa, he said. Currently Korean Ambassador to South Africa Lee Yoon has concurrent accreditation to Madagascar.

Setting up a diplomatic mission in the country is a crucial if basic initial step needed to maintain and upgrade commercial agreements and treaties. Most basic of all ― Korea does not currently recognize the government in Madagascar.

But the slew of business agreements basic to international commercial relations, such as an agreement to promote and protect investment, require constant monitoring and tweaking by experts, and that means “diplomatic boots on the ground,” according to one foreign envoy with knowledge of investment in Africa.

As a latecomer in resource investment in Africa, however, Korea has been playing an aggressive game of catch up. Trade between Korea and African countries increased to $20 billion in 2011 from $13 billion in 2000 and Korea’s accumulated investment in Africa was $4 billion in 2011, 30 percent of which is focused in Madagascar.

Korean diplomatic ties in Africa correspond with its commercial interests. Korea just wrapped up its 3rd Korea-Africa Forum in October which brought together 150 delegates from 19 African nations and the African Union, including heads of state and foreign ministers.

African interest in Korea also increased. The number of embassies of African nations in Korea nearly doubled in the past 10 years, with Ethiopia the most recent entrant. Seventeen of the 54 African nations now have full embassies here.

Shipping food out of the country is controversial because three-quarters of the Madagascar’s 20 million inhabitants live below the national poverty line and the country is highly vulnerable to food insecurity, with a chronic malnutrition rate of 49 percent, according to the World Food Program, which provides food relief and recovery to 850,000 beneficiaries.

News of the multi-million acre Korean land deal incited massive demonstrations that killed about 170 people and eventually pushed President Marc Ravalomanana out of office in March 2009.

Andry Rajoelina, opposition leader and then-mayor of Madagascar’s capital city of Antananarivo, then declared himself the new president in a move widely condemned as a coup d’etat by the international community.

Though the 2.3-million-acre land deal was suspended by the Rajoelina government, MFE Corp. is currently operating a 250-acre farm, said Jeon Hyun, 2nd secretary and desk officer for Madagascar at the Ministry of Foreign Affairs and Trade.

Daewoo could easily expand its agricultural development on larger tracts of land if the company regains its leased land.

Korea does not recognize the Rajoelina government. New elections are currently scheduled for May 8, 2013, in which neither Ravalomanana nor Rajoelina will run as candidates.

In the meantime, Park Geun-hye’s transition team is scheduled to meet African envoys on Feb. 22, according to diplomatic sources.

“(Park Geun-hye) has an open schedule when it comes to meeting African envoys,” Moon said. “What I can tell you is that our office is looking forward to meeting with African envoys, and (Park) never thinks lightly about bilateral relations between Korea and African countries.”

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s