The Export-Import Bank of Korea (www.koreaexim.go.kr, “Korea Eximbank”) announced that it will increase the volume of EDCF loans to KRW 1.35 trillion this year to help domestic SMEs and medium-large companies participate in ODA-funded public procurement projects overseas.

* Economic Development Cooperation Fund (EDCF): a government-run ODA program established in 1987 to promote the industrialization and economic stability of developing countries through the provision of long-term, low-interest credit.

Korea Eximbank unveiled such plans on the afternoon of February 25 during the"2014 EDCF Support Strategy Briefing Session" held at the Korea Federation of Small & Medium Business building in Yeouido.

Approximately 300 corporate officials attended the briefing.

To increase the participation opportunities of SMEs and medium-large firms in foreign government projects, Korea Eximbank intends to explore projects in sectors such as healthcare and rural development which are particularly well-suited for smaller-sized companies.

Greater use will be made of small-scale loans of USD 5 million or below for this purpose.

The EDCF guarantee program, on the other hand, will be exploited to promote PPP projects in the large-scale infrastructure sector.

Many developing countries have lately been pursuing infrastructure projects through PPP* deals, but are often having trouble obtaining financing due to their low sovereign credit ratings.

* Public-Private Partnership (PPP): A contractual arrangement whereby private investors finance part or all of a project to build a public facility such as a power plant, railway, port, or road and, in return, obtain from the host government the right to operate the facility at a profit, within certain limits.

In such cases, the EDCF guarantee offers a means for Korea Eximbank to mitigate the risk assumed by financial institutions financing such projects and thereby to bolster the participation of domestic companies.

Korea Eximbank Executive Director Yim Seong-hyeog commented at the occasion, “Our focus this year is to enhance the quality of ODA projects by combining the use of new tools such as the EDCF guarantee and development finance with strengthened inter-agency coordination. For SMEs struggling to get information on project tenders abroad, we will provide timely information on projects slated for EDCF funding.”

EDCF loans predominantly go to supporting projects in Southeast Asian countries such as Vietnam, but in the long term Korea Eximbank plans to gradually increase the share of EDCF aid bound for Latin America and Africa from the current 34% to 40%, while still maintaining its Asia focus.