Jun Seog Ko Shares Korea’s Model of Economic Development at Paraguay-Korea Symposium

Global Peace Foundation
July 17, 2014
International Symposium on Paraguay-Korea Relations
June 17, 2014
Greater Asunción, Paraguay
Theme: “Towards an Alliance Between Paraguay and South Korea”

Jun Seog Ko, Director of Korea Rail Network Authority

Jun Seog Ko

Below is his Powerpoint presentation:

Presentation Notes

[PAGE 2]I’m going to briefly present procedures and strategies for SOC investment. Afterwards, I’ll show a start-up S.O.C case of Korea and recent private investment cases. Here are the contents and sequence of the presentation.

[PAGE 3]The basic goal of this presentation is to give information on Korea’s experiences of economic development and professional knowledge to help S.O.C development in Paraguay. To accomplish the goal, I’ll introduce an initial stage of S.O.C development case of Korea and recent successful cases of S.O.C to arrange concrete plans.

[PAGE 4]Before we move on to S.O.C cases, we’re going to look through establishing investment plans and feasibility review. To source investment, we need the following requirements to be done. Conclude MOU with the local partners and consult investing sourcing. Constitute investment advisory from professionals in many fields. Also, we need to check if any investment barriers exist and consider solutions to the problem. Lastly, review the scale of SOC development projects. These are preliminary investigation that is indispensable to confirm feasibility of the projects.

[PAGE 5]Next is structuralization. If required rate of return is expected to be lower than economic feasibility, there is a way to receive assurances of Minimum Revenue Guarantee from the government or international organizations. The project need credit enhancement from organizations which have credit ratings over investable grade.

[PAGE 6]To execute and manage investments, we need to seal investment contract first. To finance investment capital, there are two funding strategies. First is to receive equity from Paraguayan government and Korean investors. Second is to borrow loans from Korea or Paraguay.

[PAGE 7]After financing, to manage investment asset, we need to lay emphasis on managing SOC development construction, quality control and safety supervision in the development stage. Also, through the operating process, we need to accurately control maintenance, collecting fees and distribution of profits. Although schedule of withdrawal of the principle is set up from the beginning, the schedule is different case by case. As SOC project is usually long-term investment, there is a possibility of schedule changed.

[PAGE 8]Now, I’m going to speak about an initial stage of SOC development case in Korea. That is Gyeongbu expressway project which started about 46 years ago. The project was to connect the capital and the 2nd largest city of Korea by the expressway. The total expense was approximately $136million at the time of earning $5.95billion of GDP. It was a big national project and it had a great ripple effect on boosting economic vitality and growth.

[PAGE 9]The next case is Incheon Road Bridge project, a private investment project, launched 9 years ago. The project was to build 21.4km length of a road bridge. It was divided into two sections, the government and private project. The government initiative project included road between Yeongjongdo Island and Songdo International Business District and private initiative project covered marine road bridge. It is a meaningful project because it is the longest bridge in Korea and the first private SOC investment funded by the foreigners.

[PAGE 10]This is a project route map of the project.

[PAGE 11]The total construction expense was $2.38billion. Government initiative project incurred $0.86billion and private initiative project incurred $1.52billion funded by the private investors and the government. It consisted of 51% of private capital and 49% of government subsidy.

[PAGE 12]The last case is Incheon Airport Railroad project. The railroad’s total length is 61km including 10 stations and 1 city airport between Incheon International Airport and Seoul station. The project’s first construction was finished in 2008 and the second stage in 2011. This private investment included owned capital and the government subsidy. Also the project received assurance of MRG from the government.

[PAGE 13]This is the project route map of Incheon Airport Railroad. As you can see in the map, it connects Incheon airport and Seoul city increasing accessibility and convenience of travelers and visitors.

[PAGE 14]The total expense was $4.54billion and about $0.93billion, 21% of the total amount, was funded from owned capital and $0.84billion, 19% of the sum amount, was appropriated from the government subsidy.

[PAGE 15]Lastly, I believe this event will be an opportunity to promote joint projects and partnership between Paraguay and Korea in the near future. Thank you all for listening.


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