Helping Firms Go Global
The Korea Development Bank (KDB) and the Export-Import Bank of Korea (Korea Eximbank) provided financial support totaling about 8.7 trillion won (US$7.71 billion) to South Korean companies last year to help them push into the global market.
According to financial authorities and banking industry sources on July 16, the KDB extended 6.8 trillion won (US$6.02 billion) to domestic firms for their overseas expansion last year. Of the total, 400 billion won (US$354.3 million) was overseas direct investment loans that directly went to the parent companies in Korea, while the remaining 6.4 trillion won (US$5.67 billion) was offshore loans that were provided to foreign branches of domestic firms and local financing that was provided by the bank’s overseas branches.
In particular, the KDB set aside special funds amounting to US$1 billion (1.13 trillion won) in 2016 to provide loans to Korean companies operating in developing countries under a joint financing program with multilateral development banks (MDBs), the Green Climate Fund (GCF) and export credit agencies (ECAs).
In addition, the bank is planning to provide 2.5 trillion won (US$2.21 billion) to 200 future mid-sized firms and mid-sized firms to help them enter the global market under the “KDB Global Challengers 200” program. The program is designed to help small and medium sized companies with growth potential go global.
The KDB provides not only loans but management support to companies selected for the KDB Global Challengers 200 program. KDB experts provide them with advice on mergers and acquisitions (M&As) and other issues.
The Korea Eximbank extended 1.87 trillion won (US$1.66 billion) in loans to small and medium-sized companies last year through its “On-lending” program.
The On-lending program is an indirect financing system in which the Korea Eximbank provides policy funds to financial intermediaries, which in turn provide the funds to companies that were chosen through their own screening and review procedures.
After starting the first lending program with Woori Bank in September 2015, the bank provided 59.7 billion won (US$52.88 million) in 2015, 968.9 billion won (US$858.19 million) in 2016 and 1.87 trillion won (US$1.66 billion) in 2017.
The Korea Eximbank has set aside 2.4 trillion won (US$2.13 billion) for the On-lending program this year, up 500 billion won (US$442.87 million) from a year earlier, and increased the number of financial intermediaries to 12 as well.