Support for Carbon Rights Market

Exim Bank to set up 100 bln won fund to support overseas advances of clean development mechanism businesses

The Korea Export and Import Bank announced its carbon fund business plan and the plan for strengthening its support for SMEs on July 1 on the occasion of its 33rd anniversary.
Of the 100 billion won fund to be created, Exim Bank will provide 15 percent of the fund and the balance will be shared by the Ministry of Knowledge Economy, government corporations and private companies with interest in the reduction of greenhouse gas emissions and clean development mechanisms (CDM).
In this connection, the bank and the MKE will sign an MOU on cooperation for the globalization of CDM projects and joint investment in the fund in July.
Chairman and President Kim Dong-soo said the carbon fund will be managed to purchase the carbon emission rights directly to approach the CDM market through the connection of projects for the first time, which is very significant in that regard. It will open up Korea's carbon emission rights market and become a base for the green financial business.
The bank announced its plan to form the fund to help Korean firms advance overseas with the CDM business in March and it has completed various steps to form the fund including government approval and laws and regulations to clear the way for its launch.
The CEO said economic indicators began to show signs of improvement, but uncertainties still remain and the bank will continue to expand its scale of credit support in the second half, especially to SMEs, so that a liquidity crisis will not recur with the bank playing the role of a safety pin for the financial market.
"We will create a system whereby the bank will find 300 promising SMEs and nurture their growth under a vision that it will foster Korean-type hidden champions," the chairman said.
An SME with the ability to export from $100 million to $300 million of products and services annually with more than 1,000 employees is qualified to be a hidden champion under the bank's vision. The bank assigned a foreign consulting firm to draw up a plan to nurture a Korean-type hidden champion and a plan will be announced in September so that the bank can launch a pilot project based on the new plan.
As of the end of June, the bank unleashed more than 30 trillion won in credit, equivalent to 56 percent of the total budgeted for this year, including 7.8 trillion won for SMEs, up 86 percent YoY, with outstanding loans up 79 percent or 3.3 trillion won YoY, showing that CEO Kim's call for a rise in support to SMEs since his arrival at the bank has been realized.
In March, the bank's credit support was increased to 53 trillion won from the 47 trillion won initially allocated, with credit for SMEs rising to 13 trillion won from the 8.5 trillion won allocated at the start of the year.
In the first half, the bank increased credit and loans to the green growth industries to 936.6 billion won, compared to 75 billion won in the same period last year. The bank also increased the extension of credit and loans to the shipbuilding industry to 2.6 trillion won in the first half from 200 billion won during the same period last year.
The bank also expanded its credit support to overseas plant construction firms to 4.9 trillion won from 3.2 trillion won in the first half of last year.
In the second half, the bank will continue to expand its credit and loans to back up the economic recovery led by export expansion by the early expenditure of the 53 trillion won allocated for this year and increase it within the allowable limit.
The bank will fully support firms seeking to go overseas with CDM businesses and explore the domestic carbon rights market. The bank will also provide support to SME exporters by playing the role of a safety pin to prevent any unforeseen liquidity crisis for SMEs. The bank will also try to search for SMEs with great future potential growth and nurture them from the early stages so they may grow large enough to become the once-hidden champions.
The bank will support shipyards and construction firms to secure new ship orders and construction projects overseas through the flexible management of its financial support to the shipyards and construction firms. nw

Exim Bank Chairman and President Kim Dong-soo