The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman EUN, Sung-soo, "Korea Eximbank") announced that it signed a USD 2 billion framework agreement with Vietnam’s largest state-owned oil and gas group, Petro Vietnam (PVN), on June 23.

The agreement followed the first dialogue on economic cooperation at deputy prime minister-level between the Republic of Korea and Vietnam which was held for two days in Seoul in a bid to strengthen bilateral cooperation in infrastructure projects soon to be sponsored by PVN.

It marked Korea Eximbank’s first framework agreement to sign with a state-owned company of Vietnam and it was also the first deal for PVN to enter into with a foreign export credit agency.

Recently, Korea Eximbank has been seeking to reach financial deals with Vietnam’s leading state-owned companies as a way to strengthen economic cooperation and to support Korean companies’ advance into the market as Vietnam is one of the most important partner countries for the “New Southern Policy” pushed forward by the Korean government.

In March 2017, a new regulation was announced in Vietnam that the government would impose stringent conditions with respect to issuing  sovereign guarantees for large-scale infrastructure projects sponsored by its major state-owned companies. The measure was taken in order to limit the continuing rise in Vietnam’s public debt within the boundary of 65% of GDP. Under such circumstances, Korean companies underwent difficulties in seeking new business opportunities in Vietnam due to the elevated uncertainties in financing projects.

With the signing of the agreement, however, it is expected that many of the difficulties with regard to financing projects in Vietnam will be resolved, providing Korean companies with more opportunities in winning large-scale infrastructure projects in the country, such as industrial plants and power plants.

A Korea Eximbank official said, “This agreement has created a favorable environment for Korean companies to win up-coming large-scale infrastructure projects which amount to USD 7.5 billion, such as refineries and power plants for which PVN is preparing to tender in this year.” He added that “As financing has increasingly become important in global infrastructure market, Korea Eximbank will continue to support Korean companies with its best effort so that financing does not stand in their way to win deals.”

Meanwhile, Korea Eximbank will continue to pursue signing framework agreements with entities of other countries in the government’s New Southern Policy in order to provide substantial assistance to Korean companies to facilitate their business in those markets.