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The Study on a Penetration of the Chile and Peru Public Procurement Market for Korean Companies economic cooperation, trade policy

Author LEE Mi Jung, JO Hee Moon, KWEON Jeongin, and KIM Hyemin Series 15-04 Language Korean Date 2015.12.30

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 This study aims at searching current status of Chile and Peru public procurement market and analysing the method of entering the market for Korean companies. ‘Public procurement’in this paper defines to supply goods and services by governments and international agencies. Korea have made an agreement with Central and South America Countries about public procurement part in FTA. (Fermentation: Korean-Chile FTA, Korean- Peru FTA). This study focuses on Chile and Peru government procurement market and UN market by PAHO with connecting Korea by economic agreements. PAHO is an international public health agency working to improve health and living standards of the people of the Americas. It was founded in December, 1902. It is part of the United Nations system, serving as the Regional Office for the Americas of the World Health Organization, and as the health organization of the Inter-American System. PAHO’s procurement scale is about 585 million dollars in 2013. PAHO has raised strategic fund for Central and South America Countries’s health care projects. PAHO mainly give these countries technical support for health care and procurement process come under technical support process. PAHO’s procurement process equates to UN process. Chile’s government procurement scale by Chile Compra is 10.2 billion dollars in 2014. ChileCompra is a government agency under Ministry of Finance, that operate five e-procurement system and monitor the procurement activities in government department. The procurement scale by ChileCompra is 35.3 % of total scale. The rest scale is by Public enterprise and Ministero de Obras Publicas. In Chile, public procurement policies are nothing to give any preferential treatment for foreign companies and small and medium sized businesses. So, to enter Chile’s public procurement market, Korean companies should consider to localize and participate in tender process. Peru’s government procurement scale by OSCE (Organismo Supervisor de las Contrataciones del Estado) is 13.7 billion dollars in 2014. OSCE is a government agency under Ministry of Finance, that operate one e-procurement system and perform a procurement activities instead of government department. The procurement scale by OSCE is 69 % of total scale. The rest scale is by ProInversion, UN agency, IDB, CAF. In Peru, public procurement policies are similar to Chile, not to give any special treatment for foreign companies and small and medium sized businesses. To enter Peru public procurement market, Korean companies should consider to localize and participate in tender process by various routes, especially KOICA’s local procurement process. In comparatively analysing the cases to enter Chile and Peru public procurement market by Korean, Chinese and Japanese companies, Japan’s strategies is to adopt indirect method for joint venture with local business or using local partner, because in Chile and Peru’s vendor registration each procurement government agency request on local business licence. Japan focus on improving the images for Japanese goods and services and capturing public procurement market gradually. China’s strategies are to adopt direct investment to buy local enterprise and participate public tender process as local one. China focus on participate various loan project or investment project premised on employing Chinese related to the project. Otherwise, Korea’s strategies are systematic nothing, because Korea have successful bid case based on the political events, that, for example, Korean President visited Central and South America Countries, or Ministry of Foreign Affairs and KOTRA cooperate the proposal of Central and South America Countries and inculcate their government for G2G project. The most problem is that Korean companies don’t have long period plan for Chile or Peru public tender market, but only look for victory on short time. Accordingly Korean companies suffer loss after loss based on the short period for negotiation with Chile or Peru procurement officer. Korean strategies for public tender market in Chile and Peru should be modified to go toward systematic guide and cooperation network with local Korean companies or competing countries’s companies. But Korean’s support system for entering foreign countries have some weak points as follows: ① main support countries focused on developed countries (ex. USA, UK, and so on), ② only support contents concentrated public tender process, a few contents for contracting, negotiation and follow-up management stages after tender process. This paper suggests that Korean support systems ① develop a consulting guide included simulation analysis for localization, ② arrange co-findings with IDB, CAF, and so on, and financial cooperate with competing countries, ③ connect local (Korean) partner for long negotiation time after tender process, and ④ consult some legal problems in follow-up management stages. This paper represents much to providing the adoptable route to access Chile and Peru, not only informing Chile and Peru tender process. However this paper has follow-up tasks as; deepening a study about ① cooperation network with local Korean partner and competing countries’ partner, and ② manuals for public procurement management in Central and South American countries. 

 

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