Korea to support SMEs on overseas construction

South Korea’s Ministry of Strategy and Finance said Wednesday that it would provide further financial support for small and medium enterprises to win overseas infrastructure deals.

In a meeting with industry officials in Seoul on Wednesday, Vice Finance Minister Joo Hyung-hwan said the government would establish a system allowing public financial institutions to extend financing and guarantees for SMEs to carry out infrastructure projects abroad.

“It will seek to expand policy financing by encouraging participation of from private financial institutions,” said Vice Finance Minister Joo.

“One-stop (financial) services will be provided that can boost equity and fund investments in overseas projects.”

Such services will include enabling state-run policy banks to offer indirect financing, or on-lending, through private financial institutions and provide insurance guarantees on investments in overseas construction.

Korea’s policy banks will also forge partnerships with their counterparts in emerging markets in an effort to boost SMEs’ credit line.

This comes as the government seeks to encourage local builders to pursue value-added projects such as offshore energy plants not as a subcontractor but as an investor and developer.

The Finance Ministry urged SMEs to find infrastructure opportunities in Latin America, Africa and Central Asia amid increasing risks and uncertainties in the Middle East.

“We must develop a (new) business model and engage in plant operations and management overseas,” said Joo.

“This requires us to put our heads together to create a second (overseas construction) boom.”

Korea first participated in the development of a highway in Thailand in 1965. The country’s construction industry is close to securing cumulative overseas deals worth $700 billion in half a century.

By Park Hyong-ki (hkp@heraldcorp.com)