A state-run bank in South Korea agreed Monday to provide financial support for a US$430 million road construction project in Vietnam, a move aimed at helping the Southeast Asian country secure necessary infrastructure, the finance ministry said.
The Export-Import Bank of Korea signed a memorandum of understanding with the transportation ministry of Vietnam to provide financial support, including a long-term, low-interest loan, to build a 17.85 km-long road linking Ho Chi Minh to a nearby industrial complex.
The complex is one of the country's largest industrial zones where about 200 South Korean companies are doing business.
For the road construction, about $200 million will be provided through the economic development cooperation fund (EDCF), which was launched in 1987 to help other developing countries with their basic infrastructure. The remaining $230 million will be financed by investment from the private sector.
The ministry said that it is the first time that South Korea has given financial support to Vietnam through such a public-private partnership.
The ministry expects that the project will contribute to development in and around Ho Chi Minh where about 85,000 Korean people are living by stimulating investment on infrastructure there.
It will also help Korean companies doing business in the industrial complex by reducing the overall logistical costs, the ministry added.
South Korea has engaged in a total of 44 projects involving Vietnam through the EDCF with the value of its financial support estimated at a combined 1.9 trillion won ($1.74 billion).
The latest road construction is the single largest business project that South Korea is pushing for in Vietnam in terms of the amount of financial support, the ministry said.