In a forum between the ruling Grand National party leaders and officials from the Ministry of Culture, Sports and Tourism, it was decided that the government would create a system toinsure that selected film productions,backed by banks and other financiers,would be completed and delivered on schedule and within budget.
The initial plan for this year is to start the scheme as a model, setting aside a $10m fund next month and taking applications from production companies.
Production companies certified by an officially recognised organisation such as the Korean Film Council (KOFIC) or the Korea Culture & Content Agency (KOCCA) would be eligible to apply.
Guarantors will be the Technology Credit Guarantee Fund, Korea Credit Guarantee Fund (KODIT), Seoul Guarantee Insurance, and the Korea Export Insurance Corporation (KEIC).
The government expects the scheme to especially benefit small and medium-size film and game production companies, and animation companies whose projects take a comparatively longer time to complete and who have trouble gathering investors.
Although the idea of completion bonds has long gestated in Korea, most projects up until now have been fully financed by film funds, investor / distributors and/or independent investors, in effect without the need for bonds.
But the last two years saw an influx of ill-considered investment which created a slew of questionable films, which in turn has had investors drawing back. The new completion bond system could bring about a breakthough for bank loans in the local industry.