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KDB, IBK to Inject 15 Tril. Won into Ecosystems of Key Industries
A 3-year Program to Upgrade Korea's Industrial Structure
KDB, IBK to Inject 15 Tril. Won into Ecosystems of Key Industries
  • By Yoon Young-sil
  • January 24, 2019, 09:50
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The Korea Development Bank (KDB) and the Industrial Bank of Korea (IBK) will provide 15 trillion won (US$13.29 billion) for three years to improve the ecosystems of Korea’s key industries.

 

The Korea Development Bank (KDB) and the Industrial Bank of Korea (IBK) will inject 15 trillion won (US$13.29 billion) into a three-year program aimed at making the ecosystems of Korea’s key industries more competitive.

The two banks will provide 6 trillion won (US$5.32 billion) this year. They will provide 4 trillion won (US$3.54 billion) for projects aimed at upgrading the industrial structure of the country’s key industries, such as car and shipbuilding, and new growth industries, including data, blockchain and sharing economy. The remaining 2 trillion won (US$1.77 billion) will be provided to the environmental safety sector.

The Financial Services Commission (FSC) announced the corporate investment support program on Jan. 23. It will first provide 10 trillion won (US$8.86 billion) over the next three years to upgrade the nation’s industrial structure.

The sectors that will benefit from the program this year include four key industries – automobile, shipbuilding, display, and petrochemicals and manufacturing – and four innovative industry sectors – “material, component and equipment,” “semiconductor, display and battery,” “automobile and shipbuilding,” and “textile and home appliance.”
 

The KDB will provide 7 trillion won (US$6.20 billion) by either investing in stocks, private placement bonds and equity-related bonds of mid-sized companies or granting loans to them. Mid-sized firms can be offered with a maximum of 250 billion won (US$221.53 million) for facilities funds for up to 10 years and a maximum of 30 billion won (US$26.58 million) for operation funds for up to three years.

The IBK is planning to provide a total of 3 trillion won (US$2.66 billion) in policy loans to small and mid-size companies, with 40 percent of the financing support set aside for smaller firms located in provinces. The maximum amount of loans for facilities funds and operational funds for small and mid-size companies is 25 billion won (US$22.15 million) and 3 billion won (US$2.66 million), respectively. The term of each loan is up to 15 years and less than five years.

The KDB and the IBK will all offer a prime interest rate on loans with 0.5 percent to 0.7 percent. However, a single company cannot be funded by two banks.

The banks will also fund 5 trillion won (US$4.43 billion) in the environmental safety sector for three years. The two are planning to provide 2.50 trillion won (US$2.22 billion) each and 1 trillion won (US$886.13 million) each this year. The funds will be used to invest in environmental facilities which prevent air pollution and reduce greenhouse gases as well as to prevent industrial accidents and upgrade old machines. The KDB will give out loans worth up to 30 billion won (US$26.58 million) for 10 years and the IBK up to 20 billion won (US$17.72 million) for 15 years. Both banks are planning to reduce interest rates on loans by some 1 percent point.