14.5 trillion won fund established to attract big projects

Eighteen major financial companies have agreed to set up a 14.5 trillion won ($12.6 billion) fund to attract large-scale government infrastructure projects.

The companies, led by the state-run Korea Development Bank (KDB), will create the fund under the newly-formed Korea Infrastructure Investment Platform (KIIP).

The agreement to create KIIP was made at the KDB’s headquarters in Yeouido, Seoul, on Friday. The companies include Korea Post, Korean Teachers’ Credit Union and Samsung Life Insurance.

KIIP, the brainchild of the Ministry of Strategy and Finance, was first introduced during the government economic policy plan in July. The platform aims to attract private investment on major infrastructure projects. KIIP will be in control of new infrastructure projects.

The infrastructure investment will be managed by KDB’s affiliate, KDB Infra, while KDB will take part in business arrangements and consultation. The final decision on individual investments will be made through discussions by the participants in the platform, assuring their involvement in each project at an early stage.

KIIP will initially invest 6.81 trillion won in eight infrastructure construction projects. These include a 1.6 trillion won investment in the construction of the new Bundang subway line between Yongsan District in Seoul and Jeongja-dong in Gyeonggi.

Five banks participating in the platform, including KB Kookmin Bank and Korea Federation of Community Credit Cooperatives, proposed 5.3 trillion won investments, while six pension fund institutions and seven insurance companies offered to make 3.6 trillion won and 5.6 trillion won worth of investments, respectively.

BY LEE HO-JEONG, KIM JEE-HEE [lee.hojeong@joongang.co.kr]