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Title Evaluation of Overseas Resource Development Program

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  • Date
    2007-01-22

Overseas Resource Development Program is executed as a means of securing energy and mineral resources. This report analyzes Overseas Resource Development Program and its side effects occurred during execution of this Program. Evaluation is executed base on four criterions: the appropriateness of strategic selection on mineral type, Performance Management, objectivity of managerial formality for a Loan Business for Oil Exploration, and effectiveness of support system for private enterprises.

Investment for Overseas Resource Development Program is divided into private investment and financial investment. Total 8.27 billion dollars, 6.35 billion (76.8%) from private investment and 1.92 billion (23.2%) from financial investment respectively, has been invested from 1977 to the end of 2005. A budget for Overseas Resource Development Program has been increased from 248.6 billion dollars in 2001 to 386.9 billion dollars in 2005 at average 12.5% for five years. Overseas Resource Development Program has been given a great deal of weight more and more to the Special Account for Energy and Resources from 11.0% in 2001 to 17.6% in 2005.

Based on the Evaluation of Overseas Resource Development Program, it is necessary to have remedies followed. First, it is important to establish an institutionalized system, for example a committee for strategic selection on mineral type consisted with experts, in order to operate strategic selection on mineral type flexibly. It is also necessary to provide incentives for private enterprises in order to encourage their participation especially in bituminous, bronze and uranium exploitation. Otherwise, a public enterprise should be run to operate the program.

On the other hand, three year-term possible development goals should be established introducing Performance Management System. If the goals are not achieved, the government should analyze causes to fulfill the goals through a budget distribution and improvement of system. A Loan Deliberate Council should be consisted with experts from outside or be operated under an independent agency for the objectivity of itself. Sphere of Overseas Resource Development Loan from the Export-Import Bank of Korea should be enlarged from development level to exploitation level. Moreover, the Export-Import Bank of Korea had better to extend its Overseas Investment Insurance System covering not only with domestic corporations but also foreign corporation and to lighten the restrictions which allow loan to businesses related to plant export only. The government should make continuous inspections on arrangements arrived with Resource Cooperation Committee to revitalize resource cooperation with resource holders. In addition, it is also necessary to make Resource Cooperation Committee active so that it may have additional new cooperation programs and resource holders.

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