UAE leaves open chance of T-50 buy

 

Homaid Al Shemmari, senior executive director of the aerospace business division at the Mubadala Development Company, Abu Dhabi’s state-owned main investment vehicle, speaks during a welcoming ceremony hosted by the Korean Ministry of Knowledge Economy for a group of 30 delegates from the United Arab Emirates at the Shilla Hotel in Seoul on May 20. He was the leader of the delegation. / Korea Times photo by Shim Hyun-chul

Abu Dhabi models Korea's 'rags-to-riches' success for economic diversification

By Jung Sung-ki

SEOGWIPO, Jeju Island — Despite its losing bid to sell T-50 Golden Eagle supersonic trainer jets to the United Arab Emirates (UAE) in 2009, South Korea still has a chance to renegotiate the export the state-of-the-art aircraft to the Middle East nation, which is seeking to establish broader economic ties with Seoul, said a top UAE official responsible for the Arab nation’s aerospace industry.

T-50 Golden Eagle terbang dalam formasi. (Foto: KAI)

The remarks by Homaid Al Shemmari, senior executive director of Mubadala Aerospace, comes at a time when South Korea is in an upbeat mood about selling more T-50 trainer aircraft overseas following the first export of the airplanes to Indonesia last week. It was the first time that a UAE government official has made public the possibility of reopening talks over the sale of T-50s.

Al Shemmari was visiting Korea as the representative of a 30-member Abu Dhabi delegation consisting of CEOs and top officials of both state-owned and private UAE companies interested in investing in Korea, as well as learning Korea’s “rags-to-riches” development model.

“The UAE, of course in 2009, selected the competitor of the T-50 as the trainer,” Al Shemmari, who served as a key negotiator when the UAE picked Italy’s M-346 trainer aircraft as the preferred bidder for Emirates’ trainer acquisition program to buy 48 airplanes, said in an exclusive interview with Business Focus, the weekly magazine of The Korea Times, on May 22.

“I’m sure those discussions are under way, and if there’s an opportunity after those discussions are for some reasons stalled or do not proceed, then the T-50 is definitely the best suited candidate to be fulfilling that trainer requirement of the UAE,” he said.

Al Shemmari, who served as a lieutenant colonel in the UAE Armed Forces before joining Mubadala, the investment vehicle of Abu Dhabi, declined to elaborate on the current status of the UAE-Italy trainer talks. But informed government and industry sources in Seoul have confirmed the bilateral talks over the M-346 have virtually broken down due to disagreements over trainer specifications and off-setting industrial cooperation obligations.

Nevertheless the Emirates and Italy’s Alenia Aermacchi have yet to announce any failure in their negotiations.

The Abu Dhabi official added his government had once looked at an opportunity of investing in Korea Aerospace Industries (KAI), the manufacturer of the T-50 planes, in 2008 as part of industrial cooperation programs but decided not to follow a relevant feasibility study.

“We looked at that acquisition very, very seriously in the UAE and within my field of aerospace, but we didn’t make that decision very lightly,” he said. “Investing outside the UAE has to have a significant strategic value in addition to financial returns. At the time we did an analysis and it didn’t seem to fit our strategy.”

The day after the T-50 contract with Indonesia was announced on May 25, KAI received an approval from the Korea Exchange to proceed with an initial public offering (IPO) estimated to be worth about 576 billion won ($523 million).

The state-owned Korea Finance Corp. owns a 30.5 percent stake in KAI, and three other major shareholders — Samsung Techwin, Doosan Infracore and Hyundai Motor — each have 20.5 percent. The shareholders agreed in principle earlier this year to sell their stakes after the IPO, which would help facilitate the company’s potential merger and acquisition.

The IPO is scheduled to be held by the end of June. Industry and securities sources expect KAI to sell 36 million shares at 14,000 to 16,000 won apiece.

U.S. aerospace giant Boeing and European aerospace consortium EADS are said to have interest in purchasing stakes in KAI.

Meanwhile, the head of the Abu Dhabi delegation pledged efforts to collaborate or form joint ventures with Korea in a wide range of business sectors, including aerospace, shipbuilding, semiconductors, healthcare and education under a strategic partnership that has been expanding visibly since 2008.

“The idea for us was to come and learn from the Korean model spanning the last 60 years, witness how Korea created globally competitive industries and companies,” he said. “We do have aspirations within the UAE and Abu Dhabi to become one of the leaders in the global economy.”

The UAE is finding a variety of partners and seeking ways of leveraging the knowledge of those partners in an effort to help the country diversify its economy under Plan Abu Dhabi 2030, said Al Shemmari, who serves as chairman of Abu Dhabi Shipbuilding.

“Korea is one of the largest trade partners for the UAE, with the nuclear deal that we signed in 2010. It is very clear in our mind that Korea is a key player helping the UAE reach its desired future,” he noted.

Seoul and Abu Dhabi have been doubling efforts to explore bilateral business opportunities by sharing their respective resources of technologies, human resources and energies.

In March, Korea signed a landmark deal with Abu Dhabi to develop oil fields in the UAE. The pact with Abu Dhabi National Oil Company will give Korean National Oil Corp. guaranteed stakes in reserves of at least 1 billion barrels of oil.

The two countries also agreed to store six million barrels of Abu Dhabi crude oil in Korean storage facilities for free.

In December 2009, Seoul won a $20 billion contract to build four nuclear reactors in the UAE.

http://www.koreatimes.co.kr/www/news/biz/2011/05/334_87871.html