SEOUL/SEJONG, Nov. 13 (Korea Bizwire) – South Korea is engaged in a “partnership strengthening” endeavor with the Asian Infrastructure Investment Bank (AIIB) that can assist the mega institution in successfully engaging in future development projects, a senior official said Friday.
Vice Finance Minister Joo Hyung-hwan said in a conference hosted by the Korea Chamber of Commerce and Industry in Seoul that the partnership can allow South Korean builders, with extensive experience in overseas projects, to discover projects that can be undertaken by the China-led AIIB.
South Korea is one of 57 founding members of the Beijing-based multilateral development bank (MDB) that was officially launched in late June. It holds a 3.81 percent stake in the bank, making it the fifth-largest shareholder overall. The United States and Japan did not join the AIIB.
“Such a move can greatly reduce risks associated with initial infrastructure support efforts pushed forward by the MDB,” the official said.
He added that such projects could receive co-financing support from large South Korean lenders that have the capital and know-how to engage in such projects. This he said can benefit all sides.
Joo said that a close partnership can make it possible for Seoul to use its Economic Development Cooperation Fund and its official knowledge sharing program to engage in cooperative tieups with the AIIB.
The vice minister then said that the launch of the AIIB has spurred a spike in other MDBs to invest in various infrastructure projects.
He pointed out that the Japan-led Asian Development Bank pledged to inject US$110 billion in the next five years to upgrade infrastructure in Asia, while the European Union’s European Fund for Strategic Investments (EFSI) also outlined a plan to inject 315 euros to improve dilapidated infrastructure around the world.
Even the World Bank has expressed a wish to co-finance projects with the AIIB.
Joo said that as such measures take shape, the government will move to assist local builders and financial institutions to better engage in infrastructure projects supported by the AIIB.
He said the government plans to work with construction and engineering firms to form a so-called Korea Package that can take advantage of South Korea’s prowess in building and financing to win future orders. This arrangement can also make it possible to dissuade companies from engaging in excessive competition to win orders that can lead to problems down the line.