S. Korea to widen support for overseas plant, construction orders

South Korea planned to widen financial support for local companies to win overseas plant and construction orders by encouraging private-sector financial firms to participate in overseas projects as investors, the finance ministry said Wednesday.

A new type of private-equity fund (PEF) will be established to reduce losses to private financial companies, which would be absorbed by state-run policy lenders, the Ministry of Strategy and Finance said in a joint statement with other related ministries.

Private financial firms, including banks, insurers and pension funds, will serve as the PEF's senior limited partners, which will have the right to share profits first and suffer losses later than policy lenders that will also participate in the PEF as a mid- ranking limited partner.

Policy lenders and state-run trade agencies also planned to expand their guarantees on loans by small exporters for overseas plant and construction orders, while reducing insurance commissions and lending rates.

The series of measures came amid a dimmer outlook. The country' s overseas plant orders declined 1.9 percent in the first half from a year earlier, and those in the construction sector rose just 3.1 percent. The figure was sharply down from an annual average growth of 9.7 percent over the past five years.