The law for the EDCF works by Korea Eximbank

The Korea Export-Import Bank

• The Bank

- Established in 1976

- Official export credit agency

- Providing export credit and guarantee programmes

- To support Korean enterprises in conducting overseas business

• With the Korea's policies for the export-led economy and economic cooperation with foreign countries

• Services

- Facilitation of exporting: export loans, trade finance, and guarantee programmes

- Operation of two government funds:

1. the Economic Development Cooperation Fund (EDCF) for ODA

2. the Inter-Korean Cooperation Fund (IKCF) for economic cooperation with North Korea

The Korea Export-Import Bank Act

• 42 Articles on the bank

- With the Enforcement decree

• Purpose (Article 1)

- To promote the sound development of the national economy

- By providing finance required for the overseas economic cooperation

- Such as export and import, overseas investment and exploitation of overseas resources

• Character (Article 2)

- A Juristic person

- Non-applicable of the Bank of Korea Act and the Banking Act

Korea Export-Import Bank Act 1

Contents

Article 1 Purpose

Article 2 Character

Article 3 Head office, Branches, Sub-branches and Agencies

Article 4 Capital

Article 5 Articles of incorporation

Article 6 Registration

Article 7 Prohibition of using similar name

Article 8 Executives

Article 9 Duty of executives

Article 9.2 Board of directors

Article 10 Operation committee

Article 10.2 to Article 10.5 Deleted

Article 10.6 Exception to Power of committee

Article 11 Appointment and Dismissal of Executives

Article 12 Term of Office of Executives

Article 13 Restriction on holding position of executives

Article 14 Limitation on representation of executives

Article 15 Appointing agent

Article 16 Appointment and Dismissal of staff

Article 17 Responsibility of executives

Article 18 Duties

Article 19 Raising Funds

Article 20 Export and import finance bond

Article 20.2 Investment, etc. to Juristic Persons

Korea Export-Import Bank Act 2

Article 21 Application for approval of business plan

Article 22 Deleted

Article 23 Limited amount of loan, etc.

Article 24 Prohibition of competition with other financial institutions

Article 25 Restriction on Business

Article 26 Interest rate on Loan and Discount, and Rates for Guarantee fees

Article 27 Restriction on property ownership

Article 28 Vicarious Performance of Duties

Article 29 Operational Manual

Article 30 Deleted

Article 31 Business year

Article 32 Budget

Article 33 Revised supplementary Budget

Article 34 Reserve fund

Article 35 Account

Article 36 Disposal Profit

Article 37 Compensation for Amount of Loss

Article 38 Use of Surplus Funds

Article 39 Supervision

Article 40 Reasons for Dismissal of Executives

Article 41 Report and Inspection

Article 42 Fines for Negligence

Article 43 Deleted

The Roles of the Bank

• An ECA (Export Credit Agency) Facilitating Export Transactions

- Providing export credits to promote the export of capital goods such as ships and industrial plants and high technology industries such as IT

- Providing credits to support overseas investments, overseas projects, and natural resource development projects

• Executor of EDCF (Economic Development Cooperation Fund) Enhancing Cooperative Ties with Developing Countries

- Appraising loan agreements and implementing evaluation for economic development aid projects in developing countries

- Researching ODA (Official Development Assistance) policy directions

• Executor of IKCF (Inter-Korean Cooperation Fund) Contributing to the Foundation for Reunification of North and South Korea

- Appraising, disbursing, and providing ex-post management for grants and loans regarding the fund

- Serving as a clearing settlement bank with the Foreign Trade Bank of North Korea

The EDCF

The Economic Development Cooperation Fund of Korea

The Fund

• The Economic Development Cooperation Fund(EDCF)

- Established in 1987

- By the Fund Management Council

- Under the practical operation of the Korea Eximbank

- For the industrial development and economic stability of developing

countries

• Main targets of the fund

- Human resources : providing educational equipment and sharing the

development experience through operating various trainee and expert

exchange programmes

- Economic infrastructure : to achieve self-reliance of developing countries

Economic Development Cooperation Fund (EDCF) Act

• 15 Articles on the EDCF with a Presidential Decree

• Regarding the details of Fund

- Establishment and Financial Sources

- Use, Operation and Management

- Requirement for Assistance

- Accounting Agency

• Other matters regarding the fund

- Long-term and temporary borrowings

- Disposition of profit and loss

- Supervision and order

• Article 1 Purpose

• Article 2 Definitions

• Article 3 Establishment of Fund

• Article 4 Financial Sources of Fund

• Article 5 Long-term Borrowings

• Article 6 Deleted

• Article 7 Use of Fund

• Article 8 Requirement for Assistance from Fund

• Article 9 Operation and Management of Fund

• Article 10 Fund Management Council

• Article 11 Temporary Borrowings

• Article 12 Use of Surplus Funds

• Article 13 Accounting Agency of Fund

• Article 14 Disposition of Profit and Loss

• Article 15 Supervision and Order

Funding Resources Article 4 of the EDCF Act

• Contributions from the government

• Contributions from the government-invested institutions or industrial

associations

• Contributions from other governmental funds

• Long-term borrowings pursuant to Articles 5, EDCF Act

- from other funds, financial institutions, foreign governments, foreign

financial institutions, international financial organisations, etc.

• Deposits from the National Bond Management Fund

• Profit earned from the operation of the fund

EDCF and the Bank

• The Executing Agency

- Under the Ministry of Strategy and Finance (MOSF)

- By the Article 9 of the Act

• The administrative operation and management of the EDCF

- Appraisal of project

- Execution of the loan agreements with negotiations

- Loan disbursements

• Other works

- Principal/interest payments collection

- Project supervision

- Ex-post evaluation of project operations

- Other advisory services

Break

From EDCF Fund to Loan

The types and the procedures under the Act

Types of Loans

• Several types of the loans

- By subjects, objects and main targets

• Development Project Loan

- For infrastructure projects

- Construction of roads, railways, hospitals, vocational training centers, and water supply

• Equipment Loan

- To procure equipment for the national development plan

• Public-Private Partnership Loan

- To conduct Public(governments)-Private(corporations) Partnership projects

• Two-Step Loan

- To make sub-loans through the financial institutions for the implementation of designated policies

- Promotion of small and medium sized enterprises in specified industries

• Commodity Loan

- To import commodities for the economic stabilisation

Terms and Conditions of the Loans

• The basic rules

- Classifying developing countries into five categories for the interest rate and repayment period

- With consideration to the phase of economic development, per capita income levels, and other relevant factors

• Loan Amount

- Up to the total project cost

• Interest Rate

- 0.01~2.5% per annum

• Repayment Period

- Up to 40 years

• Repayment Frequency

- Semi-annual

The Use of Fund 1 Article 7

• Extending loans or equity-investments

- To conduct the cooperation projects

• Extending loans

- To conduct investigations of the cooperation projects

- For the importation from Korea to partners(developing countries) of the commodities(specifically necessary to stabilise the national economy of the partners)

- For the other projects determined by Presidential Decree to contribute the industrial development of the partners

• Repayment of the principal of, and payment of the interest on

- The borrowings and the deposits

• Allocation for the expenditures

- Required for the creation, operation and management of the Fund

The Loan Procedure in the Bank

Overview the Procedure of the Loan for a project

Details of the Procedure

• Policy dialogue

Project investigation and identification

• Project Preparation

Plan/report and loan request

• Appraisal

Request for appraisal/Report/Decision on the loan

• Loan Agreement

Notifications/Agreement between the parties

• Project Implementation

Employment/Biddings/Investments/Procurement

• Evaluation

Appraisal step

• With a careful examination of the Feasibility Study and the Implementation plan to confirm

• The points for the Consideration in the Report or decision stage

- Whether the country is eligible for EDCF loan support

- Economic and political conditions of the country

- The outline, context and goals of the requested project

- Whether the terms and conditions are appropriate for the requested project

- The project's priority in the overall economic development plan of the recipient country

- Legal issues related to introducing a loan

- Commerciality of the requested project

- Economic, financial, technical and environmental feasibilities of the requested project

- Capability of the project executing agency and employment of consultants

- Identification of the risks throughout the project implementation process

- Viability of funding requirements, and operation and management plan

- Cooperation impact of the project to Korea and the recipient county

Procurement as Project Implementation

• After a loan agreement, as the procedure of the project implementation

• EDCF Procurement Guidelines

- To set forth the general principles and procedures

• With the Guidelines agreed upon between the Eximbank and the borrower

- Procure goods and services: from eligible source countries, agreed on between the Korean Government and the recipient government

- Methods: competitive bidding, limited competitive bidding, shopping, and direct contracting

- Eximbank's concurrence on procurement methods, bidding documents, analysis of bids, proposed awards, and contracts to be concluded

• Supplementary loan

- In case exceptional circumstances

Evaluation

• Assessment of an on-going/completed project, programme/policy

- Design, implementation and results

• Purpose

- To improve future policy, programmes and projects through feedback of lessons learned

- To provide a basis for accountability, including the provision of information to the public

• Principles

- Impartiality, Independence, Credibility, Usefulness, Partnership

• Criteria

- Relevance, Efficiency, Effectiveness, Impact, Sustainability

Thank you very much!