Seoul ups support for firms at risk from Japan’s export curbs
SEEKING to minimise the impact from the aggravating South Korea-Japan economic relations, financial policymakers have taken actions over the weekend to allocate a maximum of six trillion won ($4.98 billion) to financially support local firms and secure liquidity.
In a meeting presided over by the Financial Services Commission (FSC) on Saturday, financial authorities agreed to launch a support programme for companies threatened by Tokyo’s latest decision to place restrictions on exports of three key materials used in semiconductors and displays.
The new programme targets local companies that imported the three key materials used in semiconductors and displays since January last year, and firms that are deemed to have received damage from Japan’s export curbs are eligible for support as well.
Out of the 3.8 trillion won budget, the state-run Korea Trade Insurance Corporation (KTIC) and Export-Import Bank of Korea (Korea Eximbank) will provide two trillion won to help companies diversify their sources of import and consequently reduce reliance on Japan-produced materials.
Conglomerates eligible
While the programme’s main beneficiaries are small- and medium-sized enterprises (SMEs), conglomerates are eligible for support to diversify import sources.
The KTIC, also known as K-sure, will offer special terms and conditions on import insurance, while Korea Eximbank plans to raise the loan limit for firms seeking alternative import sources from the current 80 to 90 per cent.
Korea Eximbank will also lower its loan interest rate for both large firms and SMEs.
The government also plans to use its existing budgets previously allocated for stability in corporate management. It said it will place a cap of 2.9 trillion won on such budgets.
State-run institutions will also extend the debt maturity of affected companies by a year.
Besides operating financial programmes, the government will launch a separate programme to support facilities investment, research and development and mergers and acquisition for firms to bolster sectors related to materials, parts and equipment, while boosting competitiveness.
It will allocate money from state-run funds and institutions for firms importing products excluded from its white list and those seeking to enter the materials, parts and equipment sector.
Commercial banks including the big four – Woori, KEB Hana, Shinhan and KB Kookmin – joined in the government’s moves to limit the impact of the export restrictions.
Their financial support is focused on postponing the firms’ loan repayments and offering special conditions for loans and interest rates.
They plan to establish a task force for firms struggling with financial issues stemming from t he SeoulTok yo trade row.
“To overcome imminent obstacles, we will use our operating fund as much as possible and bankroll a sufficient amount of capital needed for research and development and mergers and acquisition to boost competitiveness of the materials and parts sector,” FSC chairman Choi Jong-ku said on Saturday.