INTERVIEW Korea's high productivity, rapid growth serve as blueprint for Latin America and Caribbean: IDB Invest CEO

Inter-American Development Bank Invest CEO James P. Scriven speaks during an interview with The Korea Times in Seoul, Monday. Korea Times photo by Choi Won-suk

By Lee Kyung-min

• Published Nov 6, 2024 10:10 AM KST
• Updated Nov 6, 2024 6:33 PM KST

Korea’s rapid advancements in the political system and economic frameworks are highly appreciated by many of its peers, as encapsulated by “the miracle on the Han River,” to the point where it has become a bit cliché.

The seemingly overused narrative, however, is touted as an exemplary model for many emerging economies in development financing, according to Inter-American Development Bank (IDB) Invest CEO James P. Scriven, a development financing expert with 22 years of experience. The multilateral development bank is a private-sector arm of IDB Group, committed to promoting the development of the Latin America and the Caribbean (LAC) region through the private sector.

Central to the development project is creating a pool of diversified assets by countries and sectors, a business model the multinational bank calls “originate-to-share.”

This pool is then shared with investors to be securitized and issued for transaction. The ultimate goal is to create a lasting impact, defined as making a change in the development finance sector and Sustainable Development Goals. The shift from a traditional “buy-and-hold” model seeks to mobilize a wider array of investors.

The business model will benefit many Korean firms expanding their presence in the region, bolstered by the multinational bank-mediated access to capital and risk mitigation measures throughout.

Further enhancing the outlook is a capital increase of $3.5 billion (2.5 trillion won) in March, aimed at expanding collaboration within the private sector. This initiative along with strengthened business networking and financing efforts  is expected to drive growth both in size and quality.

“Our experience with Korea has been amazing,” Scriven said during an interview with The Korea Times in Seoul, Nov. 4.

“We have a lot to learn from Korea not only as our shareholder but as a nurturer of high-tech businesses. There's a lot of pride in Korea within our institution. I do hope that all our countries learn from that experience.”

Trust

Korea holds a 4.3 percent stake in IDB Invest, significantly larger than Japan's share. This is particularly noteworthy considering Korea's mere 0.0004 percent stake in IDB Group, he noted.

“I think those numbers reflect trust that spans for almost 20 years. Korea helps us shape the future of a private sector-oriented multinational development bank,” he said.

The private sector and export-oriented policies of Korea were key to development, qualities the CEO seeks to emulate.

“We see this as an inspiration for the LAC region. We are excited that Korea will share its knowledge and identify synergies for business with us,” he said.

The multinational bank has a solid history of collaboration with state-run or government-funded development institutions of Korea as well as private entities.

“We have ongoing projects in the region and we are actively mobilizing Korean entities to invest in our projects in the region. We have co-invested $210 million in seven projects, including the Jamaica Public Service Company, with 40 percent Korean participation,” he said.

New opportunities abound for more Korean companies, since the bank’s services extend to advisory services, as highlighted by its expertise in designing and implementing tailor-made solutions.

Examples include a forum jointly hosted by Korea and the LAC region every two years, long lauded for facilitating collaboration on the innovation and trade. There, meetings are arranged between Korean firms and startups in the region. A pilot project was created between Ecuador and Korea as a result.

Climate investment opportunities are expected to reach $5 billion by 2030, according to IDB Invest. Also promising are investments in agri-food technology, cybersecurity, financial inclusion, manufacturing and IT.

Busan

The 2016 annual meeting in Busan was a historic moment, because it laid out a vision to create IDB Invest.

The Busan Resolution set forth a set of vision for promoting development through the private sector. Included are a long-term framework (2016-25) on strengthening effectiveness and impact as well as maximizing the efficient use of intra-group resources and synergy among IDB bodies.

The bank has since won market recognition, having won the Multilateral Development Bank of the Year awarded by LatinFinance, a banking and capital markets magazine.

It was named the 2024 ESG development finance institution (DFI) of the year by IJ Global, a global infrastructure and project finance data resource. The award was in recognition for successes in greenfield and refinancing deals.

Capital increase

IDB Invest increased its capital by $3.5 billion in March. It aims to double its operations and increase the volume to about $20 billion a year.

The move seeking to mobilize private capital at scale is critical to reach and lock in a broader base of qualified institutional buyers, credit insurers, banks and other investors.

About 40 percent of the bank portfolio is for infrastructure projects. Around 30 percent is for the agribusiness, manufacturing, tourism and digital economy.

The bank’s growth continues on a stellar path, as illustrated by improved mobilization ratio.

In 2016, it was able to mobilize only $0.60 per each dollar lent from its accounts.

Now, however, for each dollar lent in the LAC region, $2 are mobilized from the private sector.

The rewarding nature of the experience is what drives Scriven, a former CEO of a commercial lender in Argentina.

“When you’re hugged by someone you’ve provided financial inclusion to, or when you see a road or port being built — that’s what helps me sleep at night," he said. "The deep sense of purpose is what keeps me going.”