Overseas Construction Contract 'War Chest' to Grow 7.5 Times… KIND Capital Ceiling Raised from 2 Trillion to 15 Trillion Won

Nineteen Lawmakers Submit Amendment to "Overseas Construction Promotion Act"

Approved Investments Already at 1.8 Trillion Won, Set to Exceed Legal Ceiling Next Year

New Mediation Committee Established for Disputes Between Korean Companies at

A bill has been proposed to raise the legal capital limit of Korea Overseas Infrastructure & Urban Development Corporation (KIND), which supports overseas construction orders by Korean companies, from 2 trillion won to 15 trillion won. Additionally, a dedicated institution will be established to mediate disputes arising between domestic companies, including original contractors and subcontractors, at overseas construction sites. This reflects the intention to revise the Overseas Construction Promotion Act, which was enacted over 50 years ago, to keep pace with the changes in the market where investment and finance now play a decisive role in securing orders.

KIND Supports 21.8 Trillion Won in Orders... Paid-in Capital Is Only 600 Billion Won

Kim Itak, First Vice Minister of the Ministry of Land, Infrastructure and Transport (right), is taking a commemorative photo after signing a memorandum of understanding (MOU) for a $2 billion (approximately 3 trillion won) lithium and boron plant project with Kyle Houstbait, Deputy Secretary of the U.S. Department of Energy, last July in the United States. Ministry of Land, Infrastructure and Transport

According to the political community and the construction industry on September 13, Nineteen lawmakers—both from the ruling and opposition parties—including Yeom Taeyoung of the Democratic Party of Korea and Kim Jongyang of the People Power Party, all members of the National Assembly’s Land, Infrastructure and Transport Committee, have recently submitted a partial amendment bill to the Overseas Construction Promotion Act to the National Assembly. Of the 19 sponsors, 7 are members of the Land, Infrastructure and Transport Committee. The bill will undergo a legislative notice period until September 20 before it is reviewed by the committee.

KIND is the government-affiliated agency under the Ministry of Land, Infrastructure and Transport dedicated to overseas investment and development projects. It invests funding at the initial stages and participates as an investor so that domestic companies can secure overseas infrastructure projects. KIND shares the initial project costs and risks that private companies cannot bear alone. If a project is deemed viable, KIND proceeds with equity investment to help domestic companies secure construction and equipment contracts.

Since its establishment, KIND has directly invested 1.4 trillion won in 38 projects, supporting overseas orders amounting to 21.8 trillion won (excluding policy funds). A representative case is their investment in the floating liquefied natural gas (FLNG) project in Louisiana, USA, which led to Samsung Heavy Industries winning a 4 trillion won order.

The Asia Business Daily recently ran a nine-part series entitled “The Changing Game in Overseas Construction,” pointing out that although investment-driven projects are on the rise, the capacity of policy finance cannot keep up. The series also highlighted the need to boost KIND’s capital base.[See September 10, page 4]

This amendment also reflects such demands. The current legal capital limit of 2 trillion won makes it difficult to handle the increasing investments. KIND’s current paid-in capital is about 600 billion won, while already approved investments amount to 1.8 trillion won—three times the paid-in capital. Of this, as much as 1.3 trillion won still needs to be executed going forward.

Assemblyman Yeom Taeyoung stated, “By next year, the amount of approvals will exceed the legal limit,” noting that “the legal capital is out of touch with current realities.” The total approved investments are expected to increase to 2.8 trillion won next year, to 4.4 trillion won in 2028, to 6.9 trillion won in 2029, and to 10.8 trillion won in 2030. If the current trend continues, it could exceed 16.8 trillion won by 2031.

Raising the limit, however, does not automatically translate to capital expansion. The legal capital limit only sets the ceiling for possible government injections; actual paid-in capital is decided through the annual budget. The government plans to incrementally raise the paid-in capital in line with project investment timelines.

Establishment of a Dispute Resolution Committee for Original Contractor–Subcontractor Conflicts at Overseas Sites... Revising 50-Year-Old Outdated Regulations

The amendment also includes establishing an Overseas Construction Dispute Mediation Committee within the Ministry of Land, Infrastructure and Transport to resolve disputes among Korean companies operating abroad. The Subcontracting Act, which regulates original contractor–subcontractor conflicts, applies only to Korean nationals; therefore, construction companies operating overseas via locally established entities are not protected. Utilizing local courts poses obstacles in terms of costs and accessibility.

Currently, there is no legal basis for government intervention in such disputes. Two disputes reported to the Ministry this April fit this category: both were conflicts between original contractors and subcontractors regarding additional settlements due to rising construction costs and delays in preceding processes. The subcontractors faced significant cost increases due to local visa issuance delays and additional construction, but—taking into account their relationship with the original contractor—they did not even file a formal objection.

The Ministry and the Overseas Construction Association separately mediated between the two parties, bringing the dispute to a close only in June. The amended bill would have such mediation fall under the new committee. Its operation will be entrusted to the Overseas Construction Association, and mediation results will carry the same legal effect as settlements in court. Companies that do not comply with mediation may be excluded from government support programs.

The amendment will also address outdated provisions remaining in the Overseas Construction Promotion Act, first enacted in 1975. The law will abolish the Overseas Construction Promotion Committee, whose functions have diminished since the foundation of KIND, and consolidate various basic plans related to overseas construction. Definitions for ambiguous legal terms such as “accident” will be clarified, and terminology like “shoddily constructed” will be updated to “poorly constructed.” Provisions regarding proxy construction, which have become irrelevant since joining the Organisation for Economic Co-operation and Development (OECD), will be deleted as well.

A spokesperson from the Ministry stated, “As the overseas construction market shifts toward investment development models, KIND’s role in sourcing projects and helping domestic builders secure contracts will only grow. In order to enhance our companies’ competitiveness in securing export contracts, we need to expand KIND’s capital base and further broaden its responsibilities.”

This content was produced with the assistance of AI translation services.