(Yonhap) — South Korea’s state-run trade insurer said Tuesday it has signed a memorandum of understanding (MOU) to set up a formal credit line and payment guarantee arrangement with Cuba that will allow local companies to trade with the Caribbean nation.

Under the deal reached in Havana, the Korea Trade Insurance Corp. (K-sure) will provide 60 million euros (US$67.9 million) worth of credit line to the Banco Central de Cuba (BCC) and the Banco Exterior de Cuba (BEC), and establish a payment insurance arrangement.

The move can ensure that South Korean companies are paid for goods shipped to Cuba by getting a letter of credit issued by BEC — the country’s foreign trade operator — that is approved by the central bank.

“The MOU removes a major uncertainty that has held up local companies from entering the Cuban market,” K-sure President Kim Young-hak said.

In the past, even if a company got a letter of credit, it had to be confirmed by a third country bank, a process that took a considerable amount of time.

The agreement comes after Cuba reached an understanding with the United States to restore full diplomatic relations and its relations with other Western countries on the mend.

The trade insurer and businesses said there is considerable demand in Cuba for power generators, related parts and various energy-efficient electronic appliances, as well as basic necessities.