“KIND (Korea Overseas Infrastructure & Urban Development Corporation) will actively respond to the government's strategy to revitalize overseas construction orders by establishing and operating T/F supporting post-Ukraine recovery projects, T/F supporting entry into Neom City, Saudi Arabia, and T/F supporting new growth industries,” said CEO Lee Kang-hoon of KIND.
In an exclusive interview with The Korea Post media, publisher of 3 English and 2 Korean-language news publications since 1985, CEO Lee said, “We will also hold the 5th anniversary event in June to promote the institution to the public and major stakeholders, while sharing the management direction of the institution to promote overseas construction projects,” he said.
Noting that KIND plays a central role in Team Korea's strategic investment to win overseas construction projects, CEO Lee said, “Team Korea, which consists of Korean companies, public institutions, and financial institutions, is targeting overseas markets by providing comprehensive services from overseas investment development-type business development to financial procurement support and direct investment.”
The followings are excerpts from an interview with KIND CEO Lee Kang-hoon.
Question: Can you introduce what kind of organization KIND is?
Answer: The Korea Overseas Infrastructure and Urban Development Support Corporation (KIND) is a public institution established in June 2018 under the Overseas Construction Promotion Act and is called the Korea Overseas Infrastructure & Urban Development Corporation (KIND).
As Korean companies' overseas construction orders peaked at $71.6 billion in 2010, we needed a support organization to tap into the overseas infrastructure business market, which is characterized as a national competition.
Therefore, KIND was established to lead intergovernmental cooperation (G2G cooperation) for overseas infrastructure and urban development projects and to promote overseas construction projects by forming Team Korea in cooperation with the private and public sectors.
KIND plays a central role in Team Korea's strategic investment to win overseas construction projects.
Team Korea, which consists of Korean companies, public institutions, and financial institutions, is targeting overseas markets by providing comprehensive services from overseas investment development-type business development to financial procurement support and direct investment.
It also manages government policy funds, Plant Infrastructure Smartcity (PIS) and Global Infrastructure Fund (GIF). The PIS Fund is the largest overseas construction fund in Korea (1.5 trillion won target), and it has created four sub-funds of 1.1 trillion won by matching 492.4 billion won with private funds.
Q: I'm curious about KIND's goals and plans for 2023.
A: There are many expectations that uncertainties in the global economic environment will grow in the new year, but KIND will work with our companies to overcome the crisis by expanding overseas construction orders.
Recently, the government has been closely implementing overseas construction order support policies such as expanding KIND's legal capital by KRW 2 trillion, establishing an export strategy meeting, and establishing a one-stop export and order support group to achieve $50 billion a year.
In response to government support and public expectations, KIND plans to achieve a cumulative investment approval of KRW 2 trillion and its first operating surplus by 2024.
First, we will actively respond to the government's strategy to revitalize overseas construction orders by establishing and operating T/F supporting post-Ukraine recovery projects, T/F supporting entry into Neom City, Saudi Arabia, and T/F supporting new growth industries.
Second, we will improve the quality of our company's support service by raising the amount of support for the feasibility study.
We plan to carry out a preliminary feasibility study and support for preparing a bid proposal with a total of 14.3 billion won in 2023.
Third, we will promote the revitalization of policy funds to support our companies, such as revitalizing PIS funds and creating additional sub-funds.
By the end of this year, we will create an additional 400 billion won worth of sub-fund and expand linked investment in KIND's direct investment business to review thicker investment support for high-quality businesses.
Fourth, if the National Assembly passes the amendment to the dismissal law, which will increase KIND's legal capital to KRW 2 trillion in the first quarter of this year, we will run in all directions to secure paid-in capital.
Finally, we will hold the 5th anniversary event in June to promote the institution to the public and major stakeholders, while sharing the management direction of the institution to promote overseas construction projects.
Q: You said that the National Assembly is pushing for an amendment to raise KIND's capital to 2 trillion won, so what are the details and future plans?
A: KIND's legal capital limit is 500 billion won, and it is expected that it will soon fill the limit due to active investment activities since its launch.
If you are not prepared in advance due to increasing business demand, you may face a situation where you cannot make timely investments due to a lack of legal capital.
Since last year, KIND has been pushing to revise the Overseas Construction Promotion Act, which will raise its existing legal capital from 500 billion won to 2 trillion won, in cooperation with the National Assembly to actively invest overseas and support stable orders.
In this regard, the President called for continued financial support, including policy financing and promotion of private infrastructure financial investment, while checking the implementation of KIND's "Strategy to Revitalize Overseas Orders," which includes expanding legal capital.
In the first quarter of this year, the revision of the Overseas Legend Promotion Act is expected to be passed, and at the same time, KIDN is struggling to secure additional capital.
Although external conditions such as the economic recession and efficiency of public institutions are tough, we plan to secure new investments to support our companies for existing investment companies, policy financial institutions, pension funds, and mutual aid associations.
KIND's role in leading investment in overseas investment development projects is paramount to achieve the overseas construction order target of $50 billion.
We need to form a competitive team Korea and drive our company's orders with more investment.
Please help and support KIND to secure additional paid-in capital so that we can continue to support our company.
Q: With the 5th anniversary of KIND's establishment approaching, I would like to hear the representative achievements so far.
A: Since its establishment, KIND has invested $478 million directly in 20 projects in 11 countries, driving our company's EPC business orders of 5.9 trillion won.
The policy fund managed by KIND had an effect of 2.1 trillion won in orders from our company's EPC business by investing in a total of 30 projects.
First, the Polish polypropylene plant construction and operation project is the largest-ever project won by a domestic construction company in the EU, and it has generated about 1.2 trillion won in EPC orders with an investment of about $57 million.
Along with Poland's largest petrochemical group, Grupa Azotti, and large refinery Lotus, the company will build polypropylene production facilities, ports and docks in the Polyce area by 2023 to recover investment and realize profits for 20 years.
The corporation operates infrastructure cooperation centers in Vietnam, Indonesia, Bangladesh, and Kenya, and plays a role in collecting local business information and supporting orders through intergovernmental networking.
I would like to introduce Bangladesh business as a representative achievement. Starting with the signing of MOU between KIND and Bangladesh's Public-Private Cooperation Agency in April 2019, it held four rounds of Korea-Bangla PPP Platform meetings.
Five projects, including roads, railways, transmission lines, and bridges, have secured a total of $10.9 billion worth of priority business negotiation rights.
We continue to operate the Korea-Bangla PPP Platform, and as a result, the Magna Bridge project is in the process of implementing the project.
This year, many projects are underway, including the Paraguay Light Rail Project, which is expected to export Korea's first Korean railway system, and KIND will continue to lead Team Korea and support Korean companies throughout the discovery, development, and implementation of overseas projects.
Q: I would like to hear about our company's history of entering Vietnam and the Vietnamese cooperation projects that KIND has achieved.
A: Vietnam's infrastructure industry has continued to grow at an average annual rate of 9.2% from 2014 to 2019.
In the future, it is expected that we will be able to actively cooperate not only in industrial complexes, social housing, commercial facilities, and smart cities, but also in the fields of roads, railways, and green energy business.
With KIND's participation project, the groundbreaking ceremony for the Korea-Vietnam Economic Cooperation Industrial Complex was held in Heungyen Province, Vietnam, on November 25.
The Korea-Vietnam Economic Cooperation Industrial Complex is Vietnam's first Korean-style industrial complex project to support Korean SMEs' entry into the Vietnamese market.
In addition, during Vietnam's President Nguyen Xuan Phuong's visit to Korea in December last year, KIND solidified the foundation for cooperation between countries by sharing the status of Vietnam's business, such as Hanoi's social housing, Hanoi Mall project, and Tutsi-Longtan Airport.
With the meeting with the Vietnamese president, KIND will work hard to find additional projects in infrastructure and urban development through cooperation between Korea and Vietnam.
Q: There are a series of predictions that overseas orders will expand starting this year. I would like to hear about KIND's role accordingly.
A: Demand for overseas investment and development-type businesses such as the growing Middle East market is increasing due to the combination of rising oil prices and energy conversions such as renewable energy.
First of all, Vietnam is expected to revitalize public-private partnership projects in accordance with the recent announcement of the PPP Act and detailed enforcement ordinance.
In order to encourage private and foreign investors to participate in infrastructure construction projects, the Vietnamese government enacted the PPP Act in 2020, stipulating measures to support investors in response to rising demand.
In addition, Latin American countries are promoting a large part of their infrastructure projects through PPP projects to solve the shortage of infrastructure development resources.
Mexico needs to pay attention to other Latin American countries because of its relatively well-established PPP laws and systems.
Latin American MDB (IDB, CABEI, CAF) is highly valued as the preferred funding and information window for companies in the region, and KIND signed a memorandum of understanding (MOU) with CABEI (Central American Economic Integration Bank) on July 12 last year.
And, looking at the status of orders for overseas investment development projects last year, the overseas construction market is diversifying as orders in Europe and Australia have increased significantly beyond Asia and the Middle East.
Looking at the status of orders for overseas investment development projects by region in the previous year, orders from Europe and Australia are increasing beyond Asia and the Middle East.
SK Ecoplant's Norwegian Expressway Project and GS E&C's Australian Road Tunnel Construction Project (NEL Tunnel), which were recently won through partnership with global construction companies, are examples of new possibilities that Korean companies can enter the PPP market in advanced countries.
Meanwhile, KIND has been distributing PPP entry guides containing business characteristics of major countries to Korean companies since 2019 to provide overseas business information.
In 2023, we completed the survey and update of new countries, and we are striving to create an ecosystem for overseas PPP business through PPP business briefings.
KIND will support our companies from business discovery to financial support, focusing on the newly attracting market, and will faithfully achieve the purpose of establishment as a reliable partner of our company by leading competitive Team Korea.
As a public developer and investor, the corporation will lead our company to win orders for overseas construction projects.