Seoul to boost support for financing overseas projects

SEOUL, Aug. 9 (Yonhap) -- South Korea will significantly boost its support for local firms in financing their overseas projects in a bid to increase its share in the global market, the government said Tuesday.
The move comes as the accumulated amount of the global market for infrastructure and plant construction in the next 10 years is expected to reach US$21 trillion, up 20 percent from that of the past 10 years, according to the Ministry of Strategy and Finance.
"In addition, projects are becoming larger and countries ordering the projects now increasingly include newly developing countries in Central and South America and Africa, making the projects more profitable but also more risky," the ministry said.
"Also, the size of the loan from the bidding country, as well as its financial competitiveness such as low interest rates, now play a vital role in winning overseas projects due to intensifying competition."
Under the government plan, finalized and approved at an economic ministers' meeting Tuesday, the state-run Export-Import Bank of Korea (Eximbank) will more than double its investment and loans to long-term overseas projects from about 12 trillion won ($11 billion) in 2010 to 33 trillion won in 2013.
The Korea Trade Insurance Corp. will also boost the amount of its payment guarantees to 33 trillion won in 2013 from less than 20 trillion won last year.
The Korea Finance Corp., too, will create a fresh 5 trillion won fund to invest and finance new overseas projects for the next five years.
The government will also encourage investment by public funds, such as the National Pension Fund, with extra points in their annual reviews, the ministry said.
To encourage investment by private financial institutes in long-term overseas projects, the government will have Eximbank take over project finance loans after the initial three to five years.
Eximbank will also seek to double the amount of its joint financing with other financial institutes in Japan, Germany and the Middle East by 2013 to allow easier access by South Korean firms to funds in their host nations, it said.
"The government will continue to work closely with related companies, financial institutes and experts to make improvements that will meet the needs of new types of projects," the ministry said.