Government Responds to 'New Coronavirus Export Risk'... 400 Billion Won Trade Finance Support

Export Situation Review Meeting Held on the 3rd... Customized Measures Prepared
Minister Sung Yoon-mo "Prolonged Situation Negatively Affects Real Economy"
Support Including Export Insurance Premium Discounts, Shortened Insurance Payment Periods
Resolving Difficulties for Local Companies... Concurrent Export Structure Innovation

Sung Yun-mo, Minister of Trade, Industry and Energy / Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Kim Bo-kyung] The government is taking steps to resolve export difficulties faced by Korean companies due to the novel coronavirus infection (Wuhan pneumonia). It plans to supply trade finance worth 400 billion KRW to help companies secure liquidity and actively support the development of new export markets such as the New Southern Region.

On the 3rd, Sung Yun-mo, Minister of Trade, Industry and Energy, held an export situation review meeting at the Korea Trade Insurance Corporation in Jongno-gu, Seoul, to check the current status of trade with China amid the spread of the novel coronavirus and to prepare countermeasures. The meeting was attended by officials from export support organizations including the Ministry of Trade, Industry and Energy, the Trade Insurance Corporation, KOTRA, and the Korea International Trade Association, as well as representatives from industry groups.

Minister Sung said, "Since the Chinese Lunar New Year holiday is ongoing, the impact of the novel coronavirus on our exports is still limited," but added, "If the situation prolongs, there are concerns about negative effects on the real economy, including the global supply chain."

He continued, "The government recognizes the current situation seriously and plans to respond swiftly. Through differentiated responses tailored to types such as companies operating in China and those engaged in trade with China, we will minimize damage to our companies."

Concerns over Export Setbacks Due to Disruption of Korea-China Supply Chain by Novel Coronavirus

According to the Ministry of Trade, Industry and Energy's findings through KOTRA and industry groups monitoring companies operating locally, no companies have suffered significant damage from the novel coronavirus so far. However, there is ample possibility that it could negatively affect our exports and supply chain management in the future.

In the short term, there are concerns that the Korea-China supply chain could be disrupted due to factory shutdowns and logistics issues within China. Local production may decrease due to shortened factory operations and shortages of raw and subsidiary materials, and if confirmed infected workers appear after the Lunar New Year, entire workplaces could be closed, increasing the decline in production.

Domestic factories importing parts from China are expected to face supply disruptions due to halted parts supply.

In the mid to long term, there are concerns about a decrease in exports to China due to reduced Chinese consumption and investment and a decline in industrial production. Intermediate goods and capital goods account for 95% of exports to China.

[Image source=Yonhap News]

Tailored Measures for Local and Export Companies, and Materials, Parts, and Equipment Companies

The Ministry of Trade, Industry and Energy is operating the 'Novel Coronavirus Industry and Trade Emergency Response Task Force (TF)' to conduct joint public-private emergency responses. It plans to minimize damage to Korean companies through tailored measures for types such as companies operating locally in China, companies exporting to China, and materials, parts, and equipment companies.

First, for companies operating locally in China, close support will be provided focusing on 22 trade offices and commercial counselors in China, covering logistics, customs clearance, and workforce supply. For companies exporting to China, difficulties will be resolved through the Korea International Trade Association's 'Export Difficulty Resolution Support Center.'

For materials, parts, and equipment companies, the 'Materials and Parts Supply Response Support Center' will receive reports of difficulties such as raw material supply and production disruptions and will work to prevent supply difficulties and production disruptions as much as possible.

In particular, through trade finance support worth 400 billion KRW, the government will urgently and proactively resolve companies' financial difficulties in cooperation with the financial sector. This is expected to help export companies struggling to secure liquidity maintain export stability and competitiveness.

New support measures that companies can feel include short-term export insurance premium discounts (30?35%) and shortened insurance payment periods (from 2 to 1 month).

Exhibitions and trade delegations scheduled to be held in China in the first quarter will be adjusted by changing schedules or replacing them with video consultations. Additionally, export vouchers will be prioritized for companies with a high proportion of exports to China to support the development of new export markets such as the New Southern Region.

Furthermore, export structure innovation by item and market will be pursued in parallel to prevent our trade from being shaken by external risks.

Minister Sung said, "To ensure smooth procurement of automobile parts, we will request the Chinese government through diplomatic channels to keep parts factories operating and strive to stabilize the supply of raw and subsidiary materials."

He added, "As we did in response to last year's Japanese export restrictions, we will have companies report difficulties such as raw material supply and production disruptions to the 'Materials and Parts Supply Response Support Center' and prevent supply difficulties or production disruptions through government-wide collaboration and prompt support."

This content was produced with the assistance of AI translation services.