2	Report, praises, South, Korea's, cleantech, potential

South Korea has been given a stamp of approval for its green commercial plans from the influential Cleantech Group. Money is there to be made and the government is looking at easing regulations on private equity investors in spite of having dubious relations with the foreign PE industry in the past.

In a new report, 'The rise of Cleantech in South Korea', the Group concluded that the market offered huge commercial opportunities and was one that was often over-looked amid all the fuss surrounding China and India's role in boosting their own cleantech industries.

While some sector development is going on, much of it is the automotive industry, like the electric car being developed to run along induction strips and inverters embedded in a road and carrying a current to recharge electric vehicles on the move. The inventors of Scalextric would be honoured!

A major reason for Cleantech's favourable viewpoint has been the government's public embracing of these technologies as a way of solving Korea's unenviable contribution to global warming, but primarily to prepare the country for the next generation of manufacturing industries.

While Korea is some way behind the investment levels in solar and wind technologies of China, its stunning manufacturing and research efforts into everything from cars to semiconductors in the second half of the 20th century, show its capabilities.

The figures look good: the government has promised to spend $84 billion to promote cleantech over the next five years or some 2 percent of gross domestic product. This figure compares favourably with the 2 percent announced by President Obama in the US, although half of what China has proposed. As the nation's population continues to grow, with increasing levels of levels of prosperity, the need for clean and efficient fuels becomes an increasing necessity.

South Korean President Lee Myung-bak reacted to recommendations from the Presidential Committee on Green Growth, which identified ten green technologies,  solar energy, a smart electricity grid and hybrid cars, as future directions critical for the country's continued growth.

The plans, however, do give rise some interesting anomalies. First, there is the balance between cutting greenhouse gases and maintaining manufacturing output. The second is the expectation of foreign private equity and investment.

Woo Ki Jong, 52, secretary general of the committee, said the plans would reduce carbon emissions as the money entered the economy although he thought peak emissions would come this year or next. South Korea is the world’s 10th-biggest producer of greenhouse gases and says it intends cuts but its figures leave a little to be desired: by 30 percent from a 2020 forecast, effectively a four percent reduction from 2005 levels.

These figures are rubbish when one considers that the US, not the greenest proponent, plans a 17 percent reduction from 2005 levels by 2020.

But the optimists say that the plan could boost national growth by 4 percent annually when including tax breaks and regulatory changes and it is here that the Cleantech Group sees great opportunities. Already data from the government shows that South Korean manufacturing companies are promising to spend nearly $3.5 billion on cleantech in 2010 and are looking for private equity and corporate partnerships.

Currently Korea's own private-equity funds account for about 34% of the total local funding value of about $266 billion and would benefit from foreign investment.

To boost that investment the country's Financial Services Commission announced earlier this year that it would ease rules on private equity funds - local regulations on the establishing and running private equity funds are more complex than those of many other nations.

But South Korea's view of private equity has been mixed and what the state gives, the state takes away. In nearly the same breath the government has talked of increasing capital gains tax on private equity investments. This stems from a deal done in 2003 by US Lone Star. It bought a stake in the distressed Korea Exchange Bank and caused a political furore because of the huge profits foreigners could make on Korean assets. While Lone Star has been cleared of any criminal wrongdoing (it became that hot a political potato), the national pysche simply doesn't like foreigners making money from Korean ideas.

Paradoxically that might be behind the other interesting nugget contained in the Cleantech Group's report. More than 97 percent of the patents filed by Korean inventors are only filed in their home country and in their native language. This offers huge opportunities for experienced foreign investors to help reach the global market.

But the window of opportunity is narrow, according to the report, strike within the next 18 months.