This is the third article in a series of “Creative Korea Leadership – K-Trade” provided in partnership with Ministry of Trade, Industry and Energy.
SEOUL, KOREA- Korea Eximbank is actively supporting the creative industry in the latter half of this year as part of its strategy to bolster export assistance, a senior official from the bank said.
"First of all, Korea Eximbank will strengthen its support for Korean enterprises armed with intellectual property (IP) to help them attack the global market in the latter half with a total assistance fund of 150 billion won for 2013." said Moon June-Shik, director general of the Business Coordination Department of the bank.
In an interview with Korea IT Times, Moon said, "The bank's assistance will focus on the investment development-type projects using financial consultation and arrangement. Along with this, it will support developing countries' infrastructure projects with high market potential and preemption effects.”
“In addition, it will continuously support Korean companies' receipts of overseas orders by leading joint advancement into foreign markets by private financial institutions through structured financing."
Noting that shipbuilding, shipping, and construction companies are facing difficulty following the global financial crisis, he said, "Eximbank will extend a total of 5.5 trillion won in policy financing to such vulnerable sectors this year by supplementing withered commercial financing."
Eximbank wins Best Asia-Pacific ECA of the Year award
Korea Eximbank won the Best Asia-Pacific Export Credit Agency (ECA) of the Year award from the Britain’s world-renowned finance journal, Trade Finance Magazine (TFM). TFM is one of the two most prestigious finance magazines in the world based in London. The magazine selects the best ECAs every year on the basis of internal evaluation and surveys of officials at major banks and companies.
It marks the second time since 2010 that Korea Eximbank has won the award, which was presented by TFM yearly.
TFM highly praised Korea Eximbank’s role in facilitating the activities of Korean companies overseas by greatly expanding the volume of export finance, including project financing (PF) at a time when ECAs and commercial banks in the developed world are reducing their exposure in the wake of the Euro-zone crisis.
"According to the TFM, Korea Eximbank was appraised as a major player directly involved in structuring and advising complex financial deals, as well as in providing and arranging huge volumes and financing." he explained.
In the world PF market, the portion of ECAs and international organizations increased from 9 percent in 2008 to 24 percent in 2012.
In the meantime, Korea Eximbank was selected as the 2012 Best ECA Global Multilateral of the Year by the Project Finance International, the other prestigious finance magazine in the world.
Gains and losses of Korea-China FTA
South Korea and China are expected to engage in the second stage of FTA negotiations at the end of this year after settling the first-stage negotiation on modality in one year and four months.
"In general, Korea-China FTA, if concluded, will lead to the lowering of tariff and non-tariff barriers, generating such positive effects of economic growth and employment creation through expansion of the export market." he said.
"However, the nation's agricultural and fishery industries and some small manufacturers are likely to be damaged by the conclusion of the FTA. Accordingly, Eximbank is offering financing necessary for external economic cooperation, including exports and overseas investment, to help Korean companies enhance their export competitiveness by making the best use of the FTA." Moon said.
"In particular, the bank is actively supporting local companies' overseas investment and advancement in various ways through overseas investment fund loans, overseas business fund loans, and business fund loans to foreign corporations." he explained.
"Along with this, Eximbank is offering funds necessary for stable operation in overseas markets at a preferential interest rate to Korea's large and smaller companies directly or their local cooperation banks under the 'overseas joint advance partnership program'. " said Moon.
Project to foster Korean-type hidden champions
Asked about the Eximbank's strategy to foster Korean-type hidden champions, Moon said, "The bank plans to extend 22.5 trillion won or 45 percent of its total lending facility standing at 50 trillion won to small and medium-sized enterprises (SMEs) this year under the master plan to foster SMEs. Under the plan, small export starters will be gradually developed to mid-size exporters and further to hidden champion enterprises."
In case of the hidden champion project, Eximbank plans to select 80 more companies to be fostered as hidden champions this year, including 30 in the first half. This will bring the total number of those to be fostered as hidden champions to 300 with more than 7 trillion won provided in financing by Eximbank.
Last July, seven companies became Korean-type hidden champions for the first time and eight other companies were included in the list of hidden champions in August this year.
"By making the use of comprehensive export financing, Eximbank extends credit loans to SMEs with advanced technology and export performance results, even though they have no collateral." he said.
As a means of strengthening cooperative relations between large and small companies, Eximbank also plans to extend 1.3 trillion won in win-win financing to subcontractors, up 200 billion won from the previous year.
Status of EDCF operation
Since its establishment in 1987, Economic Development Cooperation Fund (EDCF) has approved a total of 295 projects from 50 different countries amounting to 9.37 trillion won. Last year alone, it executed 577.9 billion won, accounting for 43 percent of Korea's official development assistance (ODA).
Commenting that EDCF support has been extended to developing countries' economic and social infrastructures, including transportation, water resources, energy, health, and education in a balanced manner, he said, "For sustainable growth of developing countries, EDCF has focused its assistance on green growth such as renewable energy and environment."
"In particular, South Korea, which has converted from beneficiary to donor during a short-term period of time, it has become a role model for developing countries in the world." Moon stressed.
"Based on its affluent experience on the economic development, EDCF will do its best to maximize development efficiency for developing countries and enhance Koreans' self-esteem on the global stage." he said.
Project to activate ICT exports
The most urgent tasks involved in activating information and communications technology (ICT) exports are to raise the localization ratio of parts & materials in the ICT manufacturing sector and secure sizable economy to expand Korean firms' overseas advancement in the ICT service sector, according to the Eximbank overseas economic research center.
The ICT manufacturing sector covers computer and peripherals, semiconductor, communication & broadcasting equipment, video and audio equipment, electronics display equipment, and office machines, whereas the ICT service sector includes communication, broadcasting, game & software development, publication, and cultural services.
"Despite the fact that such creative industries as ICT, knowledge, and cultural contents are the future-oriented power engine industries with high growth potential and job creation, its degree of industrial maturity is low and risk is high. Accordingly, stable fund assistance and know-how on overseas advancement are necessary in all stages, from technology development to final exports, to help domestic companies with relatively low global competitiveness advance into overseas markets." he said.
"Related to this, Eximbank has been implementing a comprehensive support measure for creative industry's exports since June this year, the first time among domestic financiers. Under the step, the bank is offering a one-stop financing solution, which is optimized for fund demands by stage ranging from technology development, including intellectual property, to commercialization & exploration of overseas markets and export implementation. " he added.
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For more related articles:
1. President Park Geun-hye's special trade and investment promotion measures
2. Korea seeks to maximize benefits from FTAs
3-1. KOTRA strives to maximize FTA effects through strategic marketing
