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Ryan KB Lee – Director, Programme Management
Korea overseas INfrastructure & urban Development corporation
Urban Development:Korea’s Case and Suggestions to Colombia
Agenda
01 KIND - Introduction
02 Urban Development – Korea’s case
03 Urban Development – Beyond Korea
04 Suggestions to Colombia
4’’
5’’
5’’
4’’
Identity, Overview, Support areas
History, Cases, and Lessons learned
Strengths, Cases, and Lessons learned
01 KIND - Introduction
02 Urban Development – Korea’s case
03 Urban Development – Beyond Korea
04 Suggestions to Colombia
Agenda
Identity of KIND by Q&A
KIND is Korea’s governmental investor institution that
- invests in infrastructure and urban development projects all over the world, and
- develops new projects together with Korean companies.
Q: Private? X Governmental
Q: A bank? X An Investor, and Developer
Q: Can invest in Colombia? O Our name says it all
Q: In what condition? 1. Korean companies should be involved2. KIND invests maximum 30% of total equity
We don’t lend. We develop projects to invest in equity.
Korea overseas…
Comparison of KIND-FDN
Compared to FDN, KIND is
- similar in that we both provide advisory and financing to PPP project sponsors
- different in that KIND has feasibility study budget, and KIND develops projects itself
KIND FDN
Both are relatively new Since 2018 Since 2013
Services in common Advisory on Financing & Structuring
Focuses more onCo-Investment withKorean companies
Advisory, StructuringAnd Lending
IdentityPPP Project Co-Developer
and Co-SponsorAdvisor and
Financial institution
Service the other doesn’t have Feasibility study budget Direct lending
Foundation June 2018 by amendment of Overseas Construction Promotion Act
To support Korean investors to participate overseas Infrastructure & urban development projects
To provide total service for Project Identification, Development, Financial support throughout project lifecycle
Mission
Capital
CEO
Operation Committee Board of Directors
Strategy & Planning
Business Strategy Business Admin Finance Investment
Project Development Investment Management
Auditor
Audit Office
Authorized Capital USD 443 Mil (Paid-In Capital 167 Mil)
4 Overseas Offices
(Vietnam, Indonesia,
Uzbekistan, Kenya)
Shareholders 7 Korean SOE(State-Owned-Enterprise)s, Korea EXIM Bank, and Korean Construction Guarantee
Feasibility Study
Support Team
Programme
Management
Project
Development 2
Project
Development 1
Fund Management
Task Force
Organization
Supporting Areas
4 4 6 3
48
15
0
20
40
60 Africa
Europe
MENA
CIS
Asia
N.America
S.America
14
7
13
18
3
12
4
0
5
10
15
20 Transport
Logistics
Urban Development
Power
Plant
Water Resources
Envrionment
Pipeline (71 projects as of Aug 2019)
Source: WB 2018 PPI
Annual Report (2019. 2)
KIND’s mandate is to promote PPP projects through Equity investment
01 KIND - Introduction
02 Urban Development – Korea’s case
03 Urban Development – Beyond Korea
04 Suggestions to Colombia
Agenda
The Korean War ended in 1953 leaving the country in ruins. With strong drive by the government implementing several national development plans, however, the urbanization rate has reached up to 90% and the GDP per capita is over U$ 30,000 in 2018.
Korea’s record-breaking urbanization and economic growth are unprecedented in the world with which the national development policies such as new town development, played the pivotal role in accelerating the growth. And currently, focusing on Smart Citydevelopments in response to the 4th Industrial Revolution era.
Urban Development Process of Korea
Korean War (1950s)
Rebuilding (1960s)
Urbanization (1970s)
Promotion of economic growth policies for rebuilding the country
- 5 Year Economic Development Plan, heavy industrial growth policy(Gyeongbu Expressway, Pohang Iron& Steel)
Slums/polarization of Wealth/Aggravation of Environment from over-urbanization
Shantytown near Cheonggyecheon Stream in the capital Seoul
Coexisting of new constructions and shantytown in Seoul
Traffic in Seoul Square in 1970 Mapo, Seoul Flooded from river
In early 1960s, the population density increased to average 100 people/ha. In 1963, Seoul Metropolitan Government decided to expand their administrative district twice wider than before, and they also publicized Seoul City Plan in 1966 for developing Gangnamsite.
Seoul City Plan (1966)
Seoul Administrative District Expansion
Gangnam Site DevelopmentPurpose : Population Distribution from North to South of Han River
Incentive : Based on ‘Temporary Measures Act for the Promotion of Development of a Specific District’, most of the Real Estate-related Taxes were exempted.Changed the subway-line plan(2nd line) from bi-directional to circular line so that the whole southern side of Han River can be covered.Prestigious high schools were moved from north to south so that many families with passion for education would move as well.
Chosun Dynasty Before 1963 After 1963
Gangnam Site Development based on Seoul City Plan(1966)
Urban Development Process of Korea
Phase 1 New Town (1990s)
Phase 2 New Town (2000s)
Multi-Purpose New Town (2005~)
Due to shortage of available land and house in Seoul, government developed five new cities near Seoul
Administrative multi-purpose city for decentralizing administrative functions
In order to provide quality residential environment, Korea government developed 11 new cities.
Phase 3 New Town (2018~)
Timeline of Population growth and house supply rate in Capital Area
Among several major cities in Korea, Seoul had especially the fastest population growth rate from 1960’s to 1980’s. In order to deal with it, along with the urban area expansion of Seoul itself, many new towns were developed for population distribution and balanced development between regions.
-
50
100
150
200
250
300
350
-
2
4
6
8
10
12
14
16
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2018
Po
pu
lati
on
(m
il.)
Seoul(Population) Gyeonggi-Do(Population) House Supply Rate*
*No
. of H
ou
se per 1
,00
0 p
eop
le in C
apital A
rea
Poorest Country Developing Country Advanced Country
Urban Infrastructure Construction Urban Expansion Smart City
Road, Bridge, Sewage and water treatment facilities, Subway.
Large scale apartment complex, New town development.
ICT adoption in transportation system, Environment improvement.
1st New town Plan (1989)
2nd New town Plan (2003)
3rd New town Plan (2008)
(Data : KOSIS)
Seoul City Plan (1966)
(In Capital Area)
First population decrease in Seoul due to 1st New Town.
First House Supply Rate increase in Capital Area.
World’s First U-City Brand
In 2003, Korea has launched its own U-City brand that incorporates various advanced technologies including IT.
Definition of Korean Smart City
In Korea, ‘Smart City Act’ defines Smart City as a ‘Sustainable City that provides variety of city services through urban infrastructure constructed with the convergence of ICT and land development technology to improve the competitiveness of the city and the quality of life’
Solving Urban Problems and Innovative Growth Engine
Smart City development is a means to solve urban problems such as traffic congestion, energy and resource deficiencies and lack of infrastructure. Furthermore, it acts as a platform for nurturing new industries and job creation in connection tothe 4th industrial revolution era.
World-Class IT technologies and Smart Solutions
Transportation
Energy
Environment
DronesBIS Autonomous Vehicles ITS
Zero-Energy Building Smart Factory Smart Grid Home Solar System
Smart waste Bins Electric Car recharge Smart Water SupplyFine Dust Monitoring
Smart Home
Administration
Digital Twin Open Data Smart Farm
Smart Urban Regeneration of existing city
‘Smart City Regeneration New Deal‘ project, applying low-cost, high efficiency smart solutions to the old city center to improve the living environment .
- Analysis of local environmental conditions, identifying urban problems through residents participation ⇒ Get Solutions using smart technologies and improve living services in the area.
Busan Saha
District
Strong law enforcement enabled effective and efficient development, however, it is not a global standard any more
Development plans had target numbers, not with detailed financing plan. It badly stimulated speculative investments for the rich.
Various economic and political factors made the land values of new towns vary a lot, which created inequality among the residents.
The prototype was called ‘Ubiquitous City’, which turned out that it too much focused on IT based gadgets and superficial applications.
The country realized that building only skyscrapers wouldn’t be the ultimate answer for the city. Now we try hard for City regeneration.
Overview
Seoul
New towns around Seoul
Smart city prototype
Smart city
01 KIND - Introduction
02 Urban Development – Korea’s case
03 Urban Development – Beyond Korea
04 Suggestions to Colombia
Agenda
Smart City as a Full Package
New Town Development Experience
Experience of developing new towns successfully and boosting condensed economic growth within the half century
Various Smart Technologies
Since 2003, lots of cutting-edge technologies including ICT have been applied to newly developed cities
Customized Development for each phase of urban growth
Constant trial and verification of customized smart solutions ranging from new city to urban regeneration
Full legal framework to support smart city development
Special initiatives for Urban Development such as Housing Construction Promotion Act, Land Development Promotion Act
Project Name Iraq Bismayah New Town
Location 10km from Baghdad
Size 18㎢ ($8billion, 100,000 units)
Period 2012~2019 (Under construction)
Korea’s Role (Hanwha) EPC, BD(Build-Design)
Iraq Bismayah New Town
Module assembling construction method adopted
Project terms
1. Iraqi government secures budget and takes risk
of house sales
2. Escalation of construction costs reflects inflation
3. Prepayment for 25% of Contract Price
4. Guarantee of Payment by 3 state-owned banks
(Rasheed, TBI, Rafidain) under Ministry of
Finance
Kuwait South Saad Al Abdullah New Town
Project Name South Saad Al Abdullah New Town
Location 15km west from Kuwait City Center
Size 64.5㎢ ($4billion, 25,000~40,000 units)
ConceptSmart Energy, Smart Environment,
Smart Transportation, Smart Living
Korea’s Role
(LH) PMC, Service contract management, Setting
up structured finance for investment
(Korean company) Master Plan, Detailed Design
Project Name Nha be New Town
Location 5km south from Ho Chi Minh
Size 3.5㎢ (68,000 people)
ConceptPrestigious, Beautiful, Entertaining New Town
near the capital
Korea’s Role (GS E&C) Investment & Development
Vietnam Nha be New Town
Status
After GS E&C declared Project Commencement in
2010, the project was delayed for 8 years due to
issues of land acquisition and compensation.
Currently, GS E&C just finished the development of
Phase 1 and 360 residences are about to be on sale.
Project
NameStarlake City Development
Area 1.8㎢
DeveloperTHT Development Co.Ltd.
(Vietnam Subsidiary by Daewoo e&c)
Project
Details
Infrastructure, Residence, Commercial,
Administrative Offices area in West Lake
VisionNew CBD formation to replace
overpopulated old CBD
Vietnam Starlake City ScheduleProposal to Vietnam GovernmentBy Daewoo
1996
Investment ApprovedBy Vietnam Government
2006
Master Plan ApprovedBy Vietnam Government
2013
1st Phase(Infrastructure) Completed 2016
KIND Investment will be disbursedFor Complex Development within Starlake CIty
2019
Summary Contents
Project NameHanoi Starlake City B3CC1
(Hotel, Serviced Residence & Office Complex Project)
Location Starlake City B3CC1 Block
FacilitiesHotel, Serviced Residence, Office,
Retail
Area 21,459m2(6,491py)
Building Area 8,515m2 (2,575py)
Volume
• FloorArea:
184,238m2
(55,732py)
• Hotel : 342 unit
• S.R. : 218 unit
• Office : 48,985m2
• Retail : 2,205m2
Building to Land Ratio
39.68%
Floor Area Ratio 699.57%
Height 35F
Sponsor1
18%
Sponsor2
12%
Daewoo35%
Sponsor3
5%
Sponsor4
10%
KIND9%
Sponsor5
11%
Av. Corea
Project Name Santa Cruz New Town
Location 15km North-East from Santa Cruz City Center
Size 54㎢ ($3billion, 128,000 units)
ConceptWaste Collection and waste-to-energy facilities,
ITS Outer Ring Road
Korea’s Role
(LH) Project Management : Masterplan, Detailed
Design, CM, Marketing etc.
(Korean company) Basic & Infrastructure planning,
detailed design service performance
Bolivia Santa Cruz New Town
Private companies who built trusted relationship with the governmentlikely to be given favorable contract terms
Governments have to understand market risks of residential projects and such risks should be shared based on mutual understanding
Land acquisition and compensation is a frequent delay factor for urban development. Deliberate planning and legal enforcement are helpful.
Recruiting governmental institutions (KIND and KDB(Korea Development Bank)) will enhance the project credibility and lead to faster syndication
Master plans, feasibility study reports funded by government can work as a great starting point to develop new cities.
Iraq Bismayah City
Kuwait Abdullah City
Vietnam Nah be City
Vietnam Starlake City
Bolivia Santa Cruz New town
01 KIND - Introduction
02 Urban Development – Korea’s case
03 Urban Development – Beyond Korea
04 Suggestions to Colombia
Agenda
What Korean companies are good at What KIND can provide
Oil & Gas: All areas from upstream to down
Energy: Power plants, T/L, and S/S
Urban: Residential / Commercial / Offices
Environmental: WtE, Water treatment
Transport: Roads / Railways
Creating opportunities
from G2G network
Spending initial cost to
develop new projects
Financial structuring /
Investment analysis
Invite financial investors
(institutions or funds)
IT & Telecom: Convergence with infra/urban
Others: Healthcare, Smart city, Industrial zone
MarketingF/S,
StructuringProposal
PreparationFinancing EPC & O&M
Project Development
FinancialSupport
Project Identification
• Market Intelligence Support
• Funding for F/S, M/P C/P
• Forming Consortium, Advising on Structuring
• Financial Advisory
• Equity Investment, Mezzanine Finance
• Infrastructure Fund Involvement
Feasibility study
supports
▪ Korean companies as well as foreign governments can apply
▪ Budget: 0.3~0.5 mil. $ per project / Up to 0.9 mil. $ / Over 15+ projects every year
Flexible
Investment policy
▪ Wide coverage: Infrastructure + Urban development + Plants, etc.
▪ Project with minimal governmental involvement (e.g., BOO, urban complex development) can be
also considered for investment
Channel between
Public & Private
▪ Well established relationships with Korean/global + public/private sectors
▪ Largest investor to Public-Private partnership infra funds in Korea (ex. GIF, PIS)
Various Solutions
Differentiated Solutions
Korea’s PPP Framework and Project trend
❶ Basis : G2G Partnership Policy 2017
❷ Areas of Cooperation : PPP project Identification,
development, implementation, management
❸ Sectors
①Power and Energy ②Transport and Logistics ③Urban
Development ④Tourism and Hospitality ⑤Manufacturing
Industry ⑥Health ⑦any other Social and Economic
Infrastructure
❹ Implementation : PPPA, KIND provide potential
project through Joint Platform and GoB decides
projects to be implemented through direct contract
Sample case of G2G Cooperation
We hope more cooperation between
Korean and Colombian private companies
Governments will continue strengthening
G2G relationship for policy discussion,
co-investment, and co-financing.
New CO-KR relationship
Project Development Division
Tel : +82 2 6746 7378
Tel : +82 2 6746 7367
