South Korea’s state-run trade insurance firm has failed to retrieve some 1.4 trillion won ($1.2 billion) so far spent to cover local exporters' losses in their deals with foreign companies, data showed Tuesday.
The Korea Trade Insurance Corp. also known as K-Sure under the Ministry of Trade, Industry and Energy, mainly offers guarantees to banks that extend loans to Korean overseas developers that require large-scale and long-term financing and issue bonds to exporters. But it also offers money for local businesses that failed to collect payment from export transactions with foreign companies and even takes on such debts that exceed $3 million per case into its own hands.
As of July, the trade insurer has failed to recover nearly 30 percent of such overseas debts worth some 1.4 trillion won, K-Sure data acquired and distributed by Rep. Shin Jeong-hoon of the ruling Democratic Party of Korea showed. K-Sure cited the overseas firms’ bankruptcy and suspension of operations behind its failure.
Such accumulated foreign debts stood at a total 4.7 trillion won, in the cited period.
Most of the overseas firms that K-Sure failed to recover its debts from were based in the US, with 475.8 billion won, or 34.2 percent. Poland came in at No. 2 with 173.9 billion won or 12.5 percent, and Russia at No. 3 with 136.6 billion won or 9.8 percent. China and Brazil came in at No. 4 and No. 5, each with 96.7 billion won and 81 billion won, and accounting for 7 percent and 5.8 percent, respectively.
“South Korea must build a professional counter system by becoming familiar with different nations’ legal systems and circumstances in collecting the debts,” Shin said.
“It must also manage a blacklist to prevent local traders from transacting with certain firms,” he added.
Meanwhile, K-Sure has issued a letter of intent, which is viewed as a preliminary commitment for investment, worth 11 trillion won, or $9.4 billion, for fossil fuel projects in the last five years, similar data acquired and distributed by another lawmaker here on Tuesday showed. The commitments consisted of coal and gas-related projects.
The insurers’ commitment for renewable energy-related projects amounted to 656.9 billion won, in contrast, in the same period.
By Jung Min-kyung (email@example.com