The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Lee Duk-Hoon, "Korea Eximbank") will support Korean firms seeking to tap the Iranian market by preemptively exploring business opportunities in accordance with the government's plan for the market penetration, prepared for Iranian opening upon economic sanctions on Tehran being released. On July 14 (local time), P5+1 world powers (US, Russia·China·UK·France·Germany) and Iran reached a historic agreement on JCPOA (Joint Comprehensive Plan of Action) to resolve the Iran's nuclear issue in Vienna, Austria.
* Considering the US assembly's review period (60 days) and inspection of the military facilities of Iran (results scheduled to be submitted on December 15), the agreement is expected to be implemented gradually from the early 2016.
Korea Eximbank categorized Iran as one of the Key Countries for its Financial Support and prepared 'Comprehensive Plan for Advancement Strategy to Iran' in accordance with Iran's economic development plan. The Plan includes the financial support plan by sector and phase satisfying the demands of Korean firms to make inroads into the Iranian market. Korea Eximbank will steadily expand its financial support in the order of 'Medical service → Infrastructure → Oil·Gas·Plant' in accordance with phases of sanctions being lifted while concluding a conditional Framework Agreement with project sponsors and local financial institutions in Iran on the assumption that sanctions eased will eventually take effect. Hence, once Korean companies win projects in the sectors of infrastructure, gas or oil, Korea Eximbank will execute all-out financial supports for them. At the same time, through organizing a 'Korea consortium' with Korean companies, the Bank will participate in the competitive bidding process more actively than ever.
In the second half of this year, Korea Eximbank will implement integrated marketing activities targeting major project sponsors in Iran, aiming for restoring the network that the Bank had maintained with the sponsors in Iran. Through such activities, Korea Eximbank will preoccupy outstanding projects in which Korean firms can participate. Then the Bank will convey its intention of financial support to the sponsors, having consulted with the Korean government. By utilizing RM* organization, Korea Eximbank will survey the demand of its clients, mainly the companies of promising export sectors such as infrastructure·plant and shipbuilding and provide information of major projects in Iran to its clients.
* Relationship Manager : Group of corporate financing experts dedicated to dealing with corporate customers. Based on the close relationship they built with the companies, RMs provide customized financial service to their clients.
Currently, Korea Eximbank is in the process of preparing an MOU with the Iranian authorities for its financial support to Tehran Hospital Project (USD 300 million ~ 400 million, 1,000-bed hospital). The Teheran Hospital Project, regarded as a foundation stone of Korean-style general hospital projects in Iran, will be conducted as part of the Bank's Service Industry Finance business.
*Iran's Ministry of Health has a project plan for building ten hospitals.
Once economic sanctions are lifted from the natural resource rich country with the world's second-largest gas and fourth-largest oil reserves, it is expected that the competition among companies in many countries will be fierce to preoccupy the Iranian market since large scale projects lie ahead in the sectors including infrastructure·plant. It is expected that the Iranian government will place project orders amounting to a total of USD 60 billion in the sectors of gas (USD 31 billion), oil (USD 25 billion), infrastructure and etc. this year.
With a 77 million population, Iran is a market with high growth potential boosting its the second-largest domestic market in the Middle East. More than 66% of Iran's population are highly educated while more than 60% is high quality labor force, under the 30's. Before the Korean government joined the US-led sanctions against Iran, Iran had been one of the top four project markets in the Middle East along with Saudi Arabia and others and the sixth largest project sponsor country to Korea. To date, Iran is the third largest importer to Korea in the Middle East.
* Trade volume with Iran (unit: USD billion) : 11.5(2010)→17.4(2011)→14.8(2012)→10.0(2013)→8.7(2014)
** As of June, 2010, a cumulative USD 11.9 billion was recorded for 87 project deals.
A Korea Eximbank official said, "We are quite confident that we can effectively support Korean firms with entering the Iranian market once the Bank utilizes the network that it had built with sponsors previously and Interbank Export Loan network*, based on our experience of providing a considerable amount of financial support to infrastructure·plant and shipbuilding projects before the economic sanctions were imposed against Iran."
*Operated USD 0.21 billion export credit lines for six Iranian banks
**Financial support to infrastructure·plant projects in Iran (2003～2010) : KRW 1,340 billion in loans, KRW 664.9 billion in guarantees
***Financial support to shipbuilding projects in Iran (1997～2010) : KRW 1,826.7 billion in loans, KRW 2,445.5 billion in guarantees
