LH to Subscribe to 'Political Risk Insurance' for Stable Overseas Development Projects

Location map of Korea-Myanmar Industrial Complex (KMIC) (Provided by LH)

[Asia Economy Reporter Chunhee Lee] Korea Land and Housing Corporation (LH) has become the first Korean overseas urban development project to subscribe to insurance covering risks such as war, civil unrest, and contract breaches.

On the 26th, LH announced that it has subscribed to the ‘Political Risk Insurance’ provided by the Multilateral Investment Guarantee Agency (MIGA) to ensure the stable progress of the Korea-Myanmar Industrial Complex currently underway.

The Multilateral Investment Guarantee Agency is an international organization under the World Bank Group established in 1988 to guarantee private investments in developing countries and encourage investment promotion. To date, it has provided guarantees worth approximately 68 trillion KRW for about 900 projects in over 118 countries.

The insurance LH subscribed to is a loss guarantee contract that covers up to 6.6 billion KRW out of the 7.3 billion KRW capital invested in the joint venture (KMIC Development) established in Myanmar, with coverage lasting up to 15 years. LH also plans to additionally subscribe to insurance for the loan guarantees related to its debt obligations to the joint venture.

Through this insurance subscription, LH has established a way to minimize business losses caused by war, civil unrest, remittance restrictions, and contract breaches. Furthermore, by leveraging the credibility of the international organization, stable project progress is possible regardless of political risks such as regime changes in Myanmar. Additionally, since MIGA requires compliance with global environmental and social standards and international labor conditions during the development process, this adds an obligation that enhances the reliability of creating a high-quality industrial complex, which is highly significant.

Hiroshi Matano, President of the Multilateral Investment Guarantee Agency, stated, "The Korea-Myanmar Economic Cooperation Industrial Complex development project will contribute to job creation and strengthening the competitiveness of the industrial complex in Myanmar," adding, "MIGA’s role, including dispute resolution support for the industrial complex, will encourage private investment in Myanmar’s domestic market."

Lee Yong-sam, Head of LH’s Global Business Division, said, "By subscribing to political risk insurance, we can create an industrial complex with international competitiveness, enabling Myanmar to solve economic issues and Korea to provide an eco-friendly and pleasant working environment for companies wishing to expand overseas," and added, "We will strive to become a good example of a Korean-style smart green industrial complex that meets global standards."

The Korea-Myanmar Economic Cooperation Industrial Complex (KMIC) is the first industrial complex led by LH, located in the Yaungnipin area, 10 km north of Yangon City, Myanmar, covering an area of 2.25 million square meters. A joint venture invested by LH (40%), the Myanmar government (40%), and Global Sea (20%) is promoting the project. Construction and preliminary supply are scheduled to begin by the end of this year. Inquiries related to construction orders and supply can be made through the LH Myanmar Project Team and the KMIC joint venture.