The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Kim Yong-hwan, “Korea Eximbank”) announced on September 10 that EDCF* signed a Memorandum of Understanding on September 9 with the Vietnamese Ministry of Transport to provide a USD 200 million loan for the ‘Tan Van-Nhon Trach Expressway Project’, with Korean President Park Geun-hye and Vietnamese President Truong Tan Sang in attendance.

*The Economic Development Cooperation Fund (EDCF) was established by the Korean government in 1987 to promote economic exchanges and to assist developing countries in achieving industrialization and economic stability through the provision of long-term, low-interest credit.

The project is the largest in Vietnam ever to be supported by EDCF (with USD 430 million), and also the first to be implemented through public-private partnership (PPP).

The Korean government has been providing USD 30~50 million on average through EDCF for every project in Vietnam to build vital infrastructure including hospitals, roads, and water facilities.

* As of August 2013, EDCF has supported 44 projects with KRW 1.9 trillion (20.7% of total) in Vietnam.

The ‘Tan Van-Nhon Trach Expressway Project’ aims to connect Ho Chi Minh City and the Nhon Trach Industrial Complex* with a four-lane road (17.85km).

* The biggest industrial complex in southern Vietnam invested by Korean, Taiwanese, American and Japanese companies where about 200 Korean companies including POSCO, Hyosung, and Lock&Lock currently operate.

The expressway will be built in two sections, with EDCF financing the construction of one section (with USD 200 million) and private investors building and operating the other on a build-operate-transfer (BOT) basis (with USD 230 million).

* An arrangement whereby a private contractor(s) finances, builds, and operates a public facility, the title of which is later transferred to the government once the contractor(s) recoups its investment through fees charged to facility users.

The governments of Korea and Vietnam intend to develop the project as a milestone in the history of development cooperation between the two countries.

Chairman Kim of Korea Eximbank remarked after the signing ceremony, “This project, initiated as part of President Park’s ‘Win-Win Sales Diplomacy’ drive, will make a huge contribution to the enhancement of transportation infrastructure and the growth of private investment in Ho Chi Minh City*, the largest economic center in Vietnam and home to the largest Korean expat community in Southeast Asia. The expressway will also serve as a solid foundation for bilateral economic cooperation by driving down logistics costs for Korean companies in the Nhon Trach Industrial Complex.”

* The biggest city in Vietnam with a population of 9 million and accounting for 30% of Vietnam’s GDP and 40% of its exports. 85 thousand Koreans live in the city.