Foreign Investors Returning for Infrastructure Projects

KOREA TIMES 2000/04/09

Foreign investors are returning to Korea as the nation's economy gets back on the track in the wake of the economic crisis and recession that began in late 1997.

Many are taking a more aggressive approach to investing than in the pre-crisis period _ funneling capital into the nation's infrastructure projects.

Investment by foreign firms in the sector was once unpopular, not only because it requires a lot of capital but also because it takes a long period to reap the benefits.

Foreign businesses, which now look upon the sector as a high-potential investment area, are jointly participating with local partners. At the moment, projects related to Inchon International Airport, schedule to open early next year, in the first phase are most popular among foreign firms.

Bechtel Group Inc. of the United States is likely to become the project auditor for the construction of the airport's 61.5 km railroad, which will link Seoul and Yongjong-do Island off Inchon.

Alsthom, a joint British-French venture, is making progress in negotiations for the supply of rail cars and safety systems for the railroad. It has reportedly signed a letter of intent with Hyundai Engineering and Construction for a $200 million investment.

Canada's Agra Group submitted a proposal for the construction of the second bridge linking the airport and Inchon.

Frank Heske, head of the Delegation of the European Commission, worked to persuade the airport authority to provide European businesses the right to build logistics support facilities at the airport.

Several foreign companies, including Mitsubishi and DFS Venture of Singapore, are vying to operate duty-free shops at the airport. ``Foreign businesses have a positive outlook on the new airport since it could serve as an air traffic hub in Northeast Asia,'' said Planning and Budget Ministry official Kim Jong-min.

Another project attracting the attention of foreign businesses is a contract to supply light electric trains. Sansei of Japan signed a letter of intent with local government officials in Uijongbu, Kyonggi-do Province, for an investment of $250 million.

Two other French firms are now in contact with cities such as Hanam and Yongin, both in Kyonggi-do, and Pusan, which have either begun or are poised to begin construction of light electric train facilities.

Foreign firms are also vying to undertake projects to construct sewage facilities. Vivendi of France recently set up a local branch in hopes of making its way into the local market.

SGE of France and Asian Infrastructure Development Co. (AIDEC) of Singapore are competing for the right to build Machang Grand Bridge in Kyuogsang-namdo Province. With relations between the United States and North Korea showing signs of thawing, the possibility of foreign businesses making their way into North Korea is also growing.

Many U.S. firms hope to form consortiums with South Korean companies doing business in the North.

``If U.S. businesses are allowed in the North, construction and electric companies will be the first to gain a foothold there,'' said one business source.(Yonhap)