Includes how major projects are financed and gives examples where relevant. Explains activities of the multilateral development banks in and other aid-funded projects where procurement is open to U.S. bidders.
Last Published: 8/29/2019

Project financing (PF) is designed to facilitate funding of large-scale projects.  The concept was first introduced in Korea to finance a highway construction project between Seoul and the Incheon International Airport.  The government's decision to introduce this financing technique was prompted by the need to boost domestic demand by stimulating investments in large-scale projects, including housing construction and social infrastructure facilities.

Most of Korea’s social overhead capital (SOC) projects are funded through PF. PF is also used for the financing of private sector projects, to include real estate development and buy-outs of financially troubled companies.  Several Korean and foreign banks provide PF and offer venture capital investment programs for social infrastructure projects, private projects and SMEs in Korea.  These banks support companies through direct equity investments, although domestic companies generally have access to local funding, as well as to informal and secondary financial markets charging higher interest rates.  Debentures are also used as a financing alternate, although slightly more expensive than bank financing.  Finally, financing in the form of long-term debt is available from the Korea Development Bank (KDB), but generally for high priority industries.

The state-run Export-Import Bank of Korea (KEXIM) finances overseas projects where Korean companies participate in a consortium and typically undertake the entire process from construction to operation of the project.  In 2018, KEXIM provided $1.15 billion for an LNG import terminal project in Kuwait, $600 million for a mega-scale investment development project in Turkey, $367 million for a refinery modernization project in Bahrain, EUR 243 million for Korean subway trains in Egypt, $200 million for a Peruvian copper mine project, $173 million for a new Cebu international port project, and $88.5 million to build a national oncology center in Senegal.
 

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