A Shift in Strategies Pays Off

Korea Export Insurance Corp. lends to project owners to boost plant orders

President Cho Hwan-ik of the Korea Export Insurance Corp. is one of the busiest CEOs in the country, preoccupied with running the export insurance company in the area of finance, a big switch from his life-long career as a public servant, his last position in government being the vice minister of the Commerce, Industry and Energy Ministry.
Cho told a local reporter during an interview that he thought IBM, Sony and Samsung Electronics, all of them world-renowned first-class manufacturers, made up a core of the world economy. But, he now learned something about Merrill Lynch, Goldman Sachs and Lehman Brothers, and realized others can swing the world of finance.
He said total liquidity in the world financial market amounts to $160 trillion, almost three times the GDP of Korea, and Korea needs some of these funds to continue to grow. Its financial industry must be well-developed in order to secure these funds.
This opened his eyes to the export of funds. He said funds should be considered industrial capital and invested in diversified areas around the world, including resources development and other areas that create value-added work. For example, he pointed to HSBC and Citibank, who make enormous profits by investing in shipbuilding and other key industries around the world.
He said domestic shipbuilders make $7.8 million out of every $100 million in the global shipbuilding industry, but those global financial houses make from 4 to 5 times the profits made by shipbuilders by providing project loans over 10 years to owners of ships.
President Cho said this was why he steered the KEIC to lend funds to project owners overseas for maximum profits as soon as he joined the company in May last year. He said the strategy soon became successful as business firms placed orders for new plants with the funds from KEIC as well as purchased insurance policies from KEIC, which increased the number of new plant project orders to Korean builders.
Korea's fund exports will mark a sizeable increase when its financial companies begin to replace overseas financial companies in lending funds to foreign businesses.
President Cho's remarkable shift in the company's lending strategies paid off handsomely last year with the KEIC posting record profits, unprecedented in its history.
President Cho, 59, is a graduate of Seoul National University's Political Science Department and he entered the Ministry of Commerce and Industry soon after graduation. In 2004, he was promoted to vice-minister of the Commerce, Industry and Energy Ministry. He left government work in 2006 to become a special consultant for the Yulchon Law Firm.
Korea Export Insurance Corp. said Cho Hwan-ik, former Vice Minister of the Ministry of Commerce, Industry and Energy, was named to take over the presidency of the company on May 17.
The new CEO said he will focus on strategies to make the company an integrated supporting organization in such areas as exports, imports, overseas investment and natural resources exploration.
He also said he will reconfigure the company to be more civilian oriented in all aspects of its operations, especially its dealings with SMEs, and help exporters to further spur their exports by overcoming difficulties of being sandwiched between advanced and developing countries.
The new CEO said he will introduce personnel management and organization systems from the private business sector to promote healthy competition under performance-based personnel policies.
KEIC, the official export credit insurance agency in Korea, was established in 1992 with the aim of facilitating and promoting the nation's exports, which is a vital component of the Korean economy and exporters'overseas business activities, by insuring and providing guarantees against political and commercial risks.
As a wholly-owned corporation under the policy guidance of the Ministry of Commerce, Industry and Energy, its insurance policies and guarantees carry the full faith and credit of the Korean government.
KEIC provides export credit insurance to Korean exporters against non-payment risks by buyers, and guarantees banks that provide export financing and issues bonds for exporters. It also covers war/civil disturbances, expropriation, inconvertibility and breach of contract risks associated with new investments overseas. nw

KEIC President Cho Hwan-ik.