KEIC Plays Major Role in
Korean Biz Expansion Abroad

Provides insurance covers to Korean firms to win large projects overseas

President Cho Hwan-ik of Korea Export Insurance Co. (KEIC) fully supports the expansion of the company's role in helping Korean firms secure a large number of plant construction projects overseas by providing insurance coverage to those projects.
He said the company would like to be the bulwark for extending insurance coverage for large plant construction projects so that Korean firms can sweep the global market for those huge projects.
Cho, who took over the helm of the company last May, would like to turn the company's paradigm around in tune with the changing times. He feels change is necessary because of the country's improved international status with the enormous boost in exports, including overseas construction service. Plant construction exports alone have now reached the $30 billion level in annual terms in recent years.
In that sense, Cho wants to call KEIC a "Paradigm shifter"rather than a "hidden hand in exports,"from now on because he will try to bring about that change.
He said KEIC also provides insurance coverage on the recovery of loans for financial institutions that have financed projects. KEIC provides support for Korean builders to secure plant projects overseas and helps financial institutions to create added value. Their internationalization in the end helps the government meet its policy targets without participating directly in the market.
The company believes in supporting large overseas plant construction projects for Korean builders for such reasons, he said. KEIC has been providing support for the exploration of emerging markets for projects by building a network with key financial firms so that its support will be more competitive.
He said he is particularly concerned with providing support to firms exploring construction and natural resource projects in Asia and Africa. He said KEIC set up an 'Overseas Project Financial Insurance'facility early in the year to support Korean firms in winning large plant construction projects overseas as well as facilitating M&A activity among Korean and foreign firms, a venture which received positive reactions from the business community.
The company also has an insurance facility for small and medium firms bidding on overseas projects. He said KEIC will monitor the situations overseas in the areas of plant construction and natural resources exploration projects to see what it can do to further support Korean firms in winning large projects.
KEIC's supporting role in boosting exports usually goes unnoticed. But the company had a hand in some 21.4 percent or $69.8 billion of the $326 billion in total exports last year with the extension of its insurance coverage.
A case in point is how Samsung Electronics was able to sign an export contract for 1.7 million sets of its Anycall hand phones worth $600 million with Sprint of the United States.
Samsung Electronics was reluctant because the U.S. electronics maker had a low credit rating and it wanted a three-year payment period for the handsets. This was when KEIC stepped in and provided a guarantee in support of the U.S. buyer for the conclusion of the deal. The deal was successfully consummated and Samsung was able to go on to expand its handset market share in the U.S. to around 20 percent now.
The ability to finance projects for builders in search of large construction projects has become a key factor in winning projects overseas.
The financing ability played a key role in Daelim Industry and Samsung Engineering recently clinching a large petrochemical plant project in Saudi Arabia.
The Saudi project was worth $10 billion and the Korean bidders had trouble securing the means to finance the project as called for in the terms and conditions required for undertaking it. The international financial market has recently had a difficult time due to the subprime mortgage loan problems in the United States with interest on loans rising and funds difficult to secure. KEIC stepped in and provided a guarantee worth $670 million to help close the deal. The clincher was the competitive financing package offered by a consortium of Korean financial institutions on behalf of the Korean bidders. nw

President Cho Hwan-ik of Korea Export Insurance Corp.