Korean government to help contractors win £100bn in overseas work

The government of South Korea says it will help domestic firms win 30 overseas projects, together worth some $100bn, by giving them consulting and financial aid.

Finance minister Hong Nam-ki said it would boost the country’s economy in the wake of the coronavirus pandemic.

"The Covid-19 pandemic and tumbling oil price pose headwinds to Korea’s overseas business project expansion," he said, The Korean Times reports.

"The government will create momentum for a rebound by helping companies win contracts worth $30bn in 2020 alone."

The new policy is an echo of China’s successful strategy of lending for infrastructure schemes in developing countries on condition that Chinese contractors carry out the work.

It comes amid concern that South Korean contractors are not winning as many overseas projects as they used to. In January, Business Korea reported that overseas construction orders fell to a 13-year low in 2019.

The 30 projects chosen for an extra boost will be in the Middle East, Southeast Asia, Eurasia and the Americas.

Fifteen will be "investment developments". This is the finance ministry’s term for a form of public-private partnership project in which Koreans provide equity investment, procurement, construction, operation and maintenance.

The remaining 15 will be limited to the construction phase alone, with financing and overall management led by local partners.

The schemes selected will be offered government support through a working group comprised of the finance, land and industry ministries, as well as state lenders such as the Korea Development Bank and Export-Import Bank of Korea (Eximbank).

The government will also set up a $1.2bn fund to help projects that involve plant and IT infrastructure for smart city planning, to be led by Eximbank. And some $1.5bn of financing will be offered by Eximbank and the Korea Trade Insurance Corporation to help domestic firms win bids in high-risk countries such as Iraq.

The government will also expand its Economic Innovation Partnership Programme – a series of preconstruction studies being carried out for energy projects in Myanmar, smart cities in Uzbekistan and Indonesia’s plan to move its capital from Java to Borneo.

State lenders will expand their "Equity Bridge Loan" to help Korean firms make equity investments. This will assist 12 government-to-government projects with 11 countries, including smart cities in Russia, Malaysia, Myanmar, Vietnam, Indonesia and Peru.

Finally, lending and loan guarantee worth $8.6bn will be offered by Eximbank to help local firms with long-term funding for large projects with state-run organisations such as oil companies in Thailand, Vietnam and Indonesia.

Image: The 36km Sheikh Jaber Al-Ahmad Al-Sabah Causeway in Kuwait, completed by Hyundai E&C last year (Hyundai)

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