Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Eximbank in dilemma over Green New Deal
Eximbank CEO Bang Moon-kyu, right, gives a briefing during the Strategy & Finance Committee meeting at the National Assembly in Seoul, Monday. / Yonhap
By Park Jae-hyuk
Rep. Ki Dong-min of the ruling Democratic Party of Korea
By Park Jae-hyuk
The Moon Jae-in administration's Green New Deal initiative is causing a headache for the Export-Import Bank of Korea (Eximbank) which has invested the most in the construction of overseas coal-fired power stations among state-run financial institutions.
The government-owned bank is facing sharp criticism from ruling party lawmakers who are attempting to prohibit Eximbank, the Korea Development Bank (KDB), the Korea Trade Insurance Corporation (K-Sure) and the Korea Electric Power Corp. (KEPCO) from investing in coal-fired plants overseas amid growing calls from environmentalist organizations and the international community.
Any suspension of the ongoing projects, however, is feared to deal a severe blow to small- and medium-sized enterprises engaged in the coal industry and the state-run lenders that would have to pay significant penalties abroad for backing out of signed contracts.
According to data the Eximbank gave to Democratic Party of Korea (DPK) Rep. Ki Dong-min, Monday, the lender has offered over 2.5 trillion won ($2.1 billion) for Korean businesses to win orders at overseas coal-fired power plant construction projects.
Its investments include 618.5 billion won in the Cirebon 2 project in Indonesia in 2017, 1.1 trillion won in the Nghi Son2 project in Vietnam in 2018 and 832.6 billion won in the Jawa 9&10 project in Indonesia in 2020.
The lawmaker pointed out that Eximbank financing coal projects goes against the Moon administration's Green New Deal initiative, which seeks to increase employment and investments by switching to a low-carbon economy.
He also expressed concern that the Eximbank's investments in the coal industry could continue for a while, citing the bank's fear of a negative impact if it immediately suspended financing.
“Instead of waiting for legislation, Eximbank should preemptively reduce its financial support for related projects,” he said. “Given that the public financing of overseas coal plant construction projects has been enlarged despite the government's Green New Deal initiative, the government needs to pursue its policy more systematically and organically.”
Eximbank dismissed the concern that it would continue its financial support for the coal industry. It has maintained the stance that it would obey revised laws after their legislation.
“We have offered limited financial support for coal plant construction projects according to international environmental standards,” an Eximbank spokesman said. “However, we will follow new laws, if policymakers revise existing ones.”
On June 22, global environmental organizations demanded the government to stop investing in coal-related projects overseas, saying the investments have tarnished the country's reputation.
Former U.S. Vice President Al Gore sent letters to President Moon and Environment Minister Cho Myung-rae in March asking them to stop the public financing of coal-fired power plant construction projects overseas.
Samsung Securities, Hanwha Investment & Securities and Korea Investment & Securities canceled their scheduled investments into a coal port in Australia, after facing a possible boycott of made-in-Korea products there.