Korea will establish a $500 million industrial plant building fund to help local builders win overseas contracts, the government said Thursday.

The plan, outlined at a weekly economic policymakers meeting, calls for the pooling of money from local pension operators and Middle East sovereign funds so Korean engineering and construction companies can better secure new deals.

“Since construction projects are becoming bigger, value-added and high risk ventures, the ability of builders to come up with financing has become a key prerequisite for securing orders,” the Ministry of Knowledge Economy said.

Creating an industrial plant fund that can take advantage of money from oil rich countries in the Middle East could help South Korean construction firms in overseas markets, the ministry said.

At present, local financial institutions are generally unable to provide adequate funding even as builders bid for contracts with foreign rivals.

The ministry said that a joint investment task force will be set up with operators of sovereign funds from such countries as the United Arab Emirates and Qatar to check for projects eligible to receive funding support.

The government, meanwhile, said that it plans to increase the size of non-taxable income for overseas construction workers from 2 million won ($1,760) per month to 3 million won.

The 50 percent increase in non-taxable income aims to help relieve the shortage of South Korean workers willing to work on foreign construction projects. 

(Yonhap News)