Financial firms to fund large overseas building projects

SEOUL: South Korean and foreign financial institutions agreed Thursday, Feb 10 to provide US$4.35 billion (RM13.22 billion) to South Korean companies to help fund their large overseas building projects, Yonhap news agency quoted the government as saying.

The Ministry of Knowledge Economy said five local and 22 foreign institutions signed a memorandum to finance three major development projects this year in Singapore, Turkey and Vietnam that could facilitate construction and make it easier for builders to win more deals down the road.

The state-run Korea Development Bank and Korea Trade Insurance Corporation, along with Kookmin Bank, Shinhan Bank and Samsung Fire & Marine Insurance Co, will participate. Foreign institutions such as Citibank, BNP Paribas, HSBC and Societé Génerale also plan to pitch in.

Getting appropriate financing is a key precondition to securing major construction projects abroad, with many South Korean companies complaining they are at a disadvantage in international markets due to difficulties of procuring timely funds.

"South Korean companies have the necessary knowhow and experience, but had trouble winning deals because they could not provide the level of project financing arrangements offered by many foreign rivals," Vice Knowledge Economy Minister Park Young-june said at a signing ceremony.

He expected the new financing arrangement could set precedence for more support in the future that could benefit local companies.

The ministry, meanwhile, said US$1.80 billion worth of funds will be made available for Singapore's Aromatics petrochemical plant in Jurong, with US$1.15 billion and US$1.40 billion to be generated respectively for the Bosphorus undersea metro tunnel in Istanbul, Turkey, and Mong Duong coal-fired electricity power plant in Vietnam. All three projects involve South Korean builders with funding to be provided in the first half of this year. — Bernama