Korea Eximbank, a state-owned institution engaged in providing financial assistance to private firms and governments, has set up an office in the Philippines in anticipation of the expected rise in investments from South Korean firms.
South Korean companies from various industries are keen on putting up operations in the Philippines because of the country’s favorable economic growth prospects, Korea Eximbank said.
The bank said some of these companies were transferring their plants from China, where the costs of operations were on the rise, to the Philippines.
Some Korean firms now find it expensive to do business in China, prompting them to look for alternative sites for their businesses in Southeast Asia, it added.
The Philippines is one of the preferred sites of Korean firms, the bank said, because of the country’s positive economic indicators. These include the country’s relatively huge population and sustained economic growth.
Korea Eximbank also noted that the Philippines was poised to get an investment grade within a year or two from either or all of the three major global credit-rating firms, namely, Moody’s Investors Service, Standard & Poor’s, and Fitch Ratings.
Once the country gets an investment grade, according to the bank, business activities will rise and Korean firms want to be here when that happens.
“More Korean companies will come to the Philippines. That is why we decided it was time to open a representative office here,” Tae-ik Park, chief representatives of Korea Eximbank to the Philippines, told reporters.
“The Philippines has a high population [estimated at about 92 million] and abundant natural resources that attract Korean firms. Currently, FDIs [foreign direct investments] from Korea to the Philippines are low, but these are expected to rise,” Park added.
Korea Eximbank has just started operations in the Philippines. The Bangko Sentral ng Pilipinas issued a circular noting the approval of the bank’s operations in the country on June 18.
Park said a representative office in the Philippines was partly meant to give financial and non-financial forms of assistance to Korean firms investing in the country. Non-financial forms of assistance may include technical and sharing of business-related information on the Philippines.
Korean Eximbank is also one of the Philippines’ sources of official development assistance. For 2011 to 2013, the bank earmarked $500 million in ODA for the Philippines. Of the amount, about $246 million has been earmarked for specific projects.
The Philippines is the fifth-biggest borrower from Korea Eximbank following Vietnam, Indonesia, Sri Lanka and Cambodia.
Korea Eximbank lends to 49 countries.