South Korea will create a $2 billion infrastructure fund to help local construction companies expand into foreign markets, the government said Thursday.

Unveiled at a meeting of foreign economy-related ministers in Seoul, the move aims to provide the necessary funding so builders can engage in value-added investment and development projects that require a sizable injection of money up front, the Ministry of Land, Infrastructure and Transport said.

The Korea Overseas Infrastructure Fund will be jointly operated with Korea Investment Corp., with the latter to use its foreign reserve holdings to help companies.

Finance Minister Choi Kyung-hwan, who chaired the meeting, said that there is a pressing need for local builders to climb the value-added chain if they want to continue growing.

"The construction sector has made stunning strides in the past half century, and will continue to be a growth engine for the country in the future," he said.

He said that with the launch of the China-led Asian Infrastructure Investment Bank, there will likely be more opportunities for South Korean construction companies to take part in large scale projects in Asia.

According to the ministry, South Korean companies have secured orders surpassing $700 billion as of June since making the first foray abroad in 1965, with the latest plan aimed at boosting the quality of projects that will be undertaken in the future.

In the past, most building projects won by local construction and engineering firms were simple subcontract arrangements. Because of this, investment and development projects won by local companies only accounted for 5.6 percent of the total orders over the past five years, according to government data. (Yonhap)