Sudan as an Emerging New Market

https://korean-electronics.com//inquiryIt is the company’s first priority to target promising fields based on consideration of government policies and the current market situation in order for Korean companies to advance into markets like Sudan, which is expected to emerge as a new market. The Sudanese government is executing a five-year economic development plan by promoting manufacturing industry and attracting foreign investment after difficulties following the independence of South Sudan in 2011 and low oil prices. Currently, Korea’s major exportation items include construction heavy equipment and automobile-related products such as parts, cars, trucks and batteries. And as expectation on demand for consumption material and base material increases, promising items in future are considered to be medical devices, mechanical equipment for agriculture and stockbreeding, fertilizer and cosmetics.
Macroscopically, after oil exports taking a hit due to the independence of South Sudan that took over 75% of overall oil deposits, Sudan has been unable to overcome its reform of economic structure completely.
Microscopically speaking, due to undeveloped Internet or statistical data, it is necessary to pay close attention to the current market situation and business capability of buyers through business trips to the sites.
KOTRA revealed that it quick action would be needed to capture a share of the Sudanese market, focusing on automobile related items, medicine, mechanical equipment for agriculture and stockbreeding and cosmetics as the U.S. State Department announced its lifting of economic sanctions on Sudan, which lasted for the past 20 years.
The U.S. government announced that it would lift economic sanctions on Sudan from 12th based on its positive evaluation for their cooperation with the United States to resolve regional conflicts and the war on terror, stop hostile activities, and improve human rights. Since 1997, the United States had been pressurizing Sudan with economic sanctions focusing on restricting trading and financial transactions and freezing assets based on reasons such as terrorism support, violation of human rights and religious persecution.
However, Sudan − along with Iran and Syria − is still included in three terrorism-supporting nations designated by the United States, so exporting of weapons to Sudan is still prohibited. The possibility of exempting Sudan from the list will be separately examined.
Meanwhile, this sanctions lifting is designed to isolate North Korea diplomatically. And it is reported that Sudan has broken offdiplomatic relations with North Korea beforehand. Also, to keep Iran in check, Saudi Arabia and Israel have requested this sanctions lifting, which is positive.
Sudan has a population of 40 million according to UN DESA. And it is one of three large African markets, after Nigeria and South Africa, with 95.6 billion dollars in GDP, according to the World Bank. With its size (1.89 million km2) being No. 15 in the world, it is a strategic point connecting the Middle East and Africa. Sudan shares its border with three countries such as South Sudan and Central Africa along with the Red Sea in the south. Even though it is located in Africa geographically, its religion (Islam), culture (Islam) and trade (depending on the Middle East) show more characteristics of a Middle Eastern country. In reality, Sudan is one of few nations that have joined AD and AL simultaneously.
With this sanctions lifting, Sudan is expected to vitalize imports and exports due to restrictions on finance and foreign exchange being eased in the short run. In the longer term, foreign investment and infrastructure project development are expected to expand. For a long time, Sudan has faced difficulties such as extremely low foreign exchange, price spikes and depreciation of its own currency.
As foreign remittances become possible through financial institutions, trade invigoration is expected with transaction costs and time saved and convenience improved. So far, Sudanese companies with settlement cooperating companies in third countries such as Dubai have been able to import products because dollar remittances (in & out) through U.S. banks were impossible except for a few exceptional cases.
Foreign exchange rates and price stabilization are expected to play a role in trade invigoration. Most of major buyers of Sudan that are in KOTRA’s database have suspended their importation due to depreciation of its currency against the dollar and inflation at estimated 30% in 2017. Some buyers have postponed their settlement even after signing a purchasing contract, which gave our companies a hard time. It is expected that this sanction release will liberalize foreign exchange so that depreciation of its currency against the dollar can be stabilized. Recent rebound of its currency against the dollar reflects its expectation of sanctions lifting.
Despite recognition of the potential of the Sudanese market, overseas companies who have deferred or withdrawn their investment are expected to expand the investment focusing on promising fields. Also, as the Sudanese government is relieved from financial pressure, it is expected that investment restrictions of MDB will be released, which means vitalization of infrastructure investment in the fields of airports, roads, bridges, water resources and energy. So far, the infrastructure development within Sudan has relied on loans from China and some Arabic countries, but lately, even this has been insufficient due to low oil prices, etc.
Seong-joo Lim, the chief of trade at KOTRA in Khartoum, explained, “The Sudanese market is not unfamiliar to our companies as Daewoo group had paidattention to the value of the Sudanese market and established a firm position in wide areas such as medicine, hotels, finance, fiber and tire manufacturing with large-scale investment.” He added “Currently, Korean automobiles occupy 60% of market share while electronics and mobile phones (No.1 or 2) are doing well as major products. So even small and mediumꠓsized companies that want to advance into new markets should be encouraged to pay attention to Sudan as the recognition of Korea and Korean companies is high with influence of Hallyu, the Korean Wave, which has become popular recently.”

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