South Korea’s state-run financier has established connections across Southeast Asia to export its know-how on development finance to other countries.
The Korea Development Bank announced last week that it has signed a memorandum of understanding with Sarana Multi Infrastruktur, or SMI, its Indonesian counterpart to open a local operational office named “Korea Desk” in Jakarta.
The KDB’s Korea Desk will be installed in the headquarters of SMI, and the two banks agreed to work together on project financing and syndicated loans.
SMI is wholly owned by the Indonesian government. It was founded in 2009 for the purpose of boosting infrastructure investment. With a total of $28 million assets, the institution is planning to transform into a development bank next year.
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KDB Chairman Lee Dong-geol (left) and SMI CEO Emma Sri Martini shake hands after signing a memorandum of understanding at the SMI headquarters in Jakarta on Nov. 22. (KDB) |
Through the Korea Desk at SMI, Korean businesses operating in the country and local Indonesian companies are expected to have wider access to loans including project financing.
It was part of KDB Chairman Lee Dong-geol’s globalization plan for the bank since taking helm of the bank in February. Lee set up a Korea Desk at the State Bank of India in August in addition to similar offices in Singapore, Vietnam, Myanmar, Thailand and Indonesia.
“The latest Indonesia Korea Desk completes KDB’s Southeast Asian financial belt connecting the major countries across the region in terms of cooperation with the country’s state financiers,” the bank said in a statement.
KDB owns a total of $1.5 billion in assets in Southeast Asia, as of 2015. The bank aims for this sum to reach $3 billion by 2020.
As a development bank, KDB has been leading efforts to form a global financial network for Korean financial and nonfinancial institutions operating abroad.
According to the bank, Korean financial institutions occupy a mere 2.5 percent in the global project financing sector, and a 0.8 percent share in syndicated loan issuances worldwide. Due to the small presence of Korean finance in the international market, Korean businesses face difficulties in financing when going global.
KDB allocated $1.7 billion this year, up 38 percent from the previous year, for overseas projects with participation by Korean companies, it said.
“We are playing the role of linking finance with companies planning to take part in overseas projects,” said a KDB spokesman.
Beyond Southeast Asia, the KDB is also eyeing Iran as a new market for Korean businesses as international sanctions on the country have been lifted. The bank has signed memorandums with an Iranian government agency for the reconstruction of infrastructure and the country’s central bank in May.
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