The Korea Eximbank and the Philip-pines’ Department of Agriculture recently signed a Memorandum of Understanding for the construction of a multipurpose dam on the Jalaur River in the southern Philippine province of Iloilo. This bilateral agreement is expected to provide Korean companies assistance in expanding in the Philippines.
The Korea Eximbank said that on November 21 last year, Seoul and Manila signed an agreement on providing economic development cooperation funds (EDCF) for construction of the Jalaur River multi-purpose dam. Kim Yong-hwan, chairman of Korea Ex-imbank, and Philippine Agriculture Secretary, Proceso J. Alcala, signed a deal at Malacanang Palace in Manila, with South Korean President Lee Myung-bak and his Filipino counterpart Benigno Simeon Cojuangco Aquino III in attendance.
Korean Companies Expected to Enter Local Market
Once completed, the dam will provide water for a 31,840ha breadbasket region in Iloilo, and generate 6.6MW of electricity. The dam will also greatly improve the drinking water and industrial water supply lines, as well as help prevent flooding and promote ecotourism. After signing the agreement, Chairman Kim said, “The Philippines is our close ally, fighting for South Korea during the Korean War and also an Official Development Assistance (ODA) partner. I am very pleased to provide our close ally with the foundation for large-scale agricultural infrastructure development such as dams and waterways. Construction of the damn will contribute to improving agricultural productivity and generating eco-friendly hydroelectric power, as well as further enhancing South Korea's international reputation as a leading country in green growth.”
The Philippine government plans to carry out the Jalaur Rivermulti-purpose dam project through Public-Private Partnerships (PPP). Once the Philippine government actively attracts Korean investors and receives the EDCF, an increasing number of Korean companies will be able to boost their presence in the Philippine market. The Ministry of Foreign Affairs and Trade and its Philippine counterpart signed an inter-governmental framework arrangement to provide 500 million dollars by 2013. Under the agreement, Korea Eximbank plans to provide the EDCF for large-scale infrastructure development such as roads, airports, electricity, and dams over the next three years.
Korea Eximbank Providing Financial Support to Large-scale Overseas Projects
Korea Eximbank has been supporting Korean companies seeking to enter overseas markets. Since the late 1990’s, the bank has been actively financing Korean companies seeking to land foreign contracts.
At the end of October, the bank posted a record 11.3 billion won in support for overseas plant construction projects. This is three times larger than the 4.3 trillion won set in 2007. Over the same period, the bank has also provided 3.1 trillion won to Korean companies seeking to win overseas green projects. This is four times larger than the 700 billion won in 2008, when EDCF support began.
Korea Eximbank forecasts that with oil money entering plant construction markets, Korean companies will be able to obtain more construction contracts. Therefore, the bank plans to expand financial support to Korean companies, as well as its cooperation with domestic and foreign financial institutions. In late July, Korea Eximbank signed a memorandum of understanding with seven foreign commercial banks, including Mizuho and BTMU in Japan, regarding the co-financing of overseas projects. In September, the bank signed an MOU with three banks from the Middle East, and also plans to sign MOUs with nine other banks in the region, including the Islamic Development Bank (IDU) by the end of this year.
These agreements will pave the way for Korean companies to receive oil money for large-scale overseas projects. One official at Korea Eximbank said, “Advanced countries like the US, Japan, and France are directing all their efforts to financing their domestic companies for large-scale overseas projects. As the primary agency in charge of supporting overseas trade, Korea Eximbank will provide all-out financial support to domestic companies in order so that they can expand their scope as far as possible.”