Export Companies "Trade Finance Increase Not Felt... Industry-Specific Customization Urgently Needed"

"Government Must Introduce Policies to Increase Labor Flexibility If No Effective Measures Are Available"

[Image source=Yonhap News]

[Asia Economy Reporter Moon Chaeseok] "After sales volume dropped by 40% last month, we tried dumping in the Singapore market, but Singapore did not accept it. Global demand for aviation fuel has plummeted, so neither crude oil nor petroleum products are selling. Sales volume in Daegu and Gyeongbuk fell sharply by 40% at the end of last month, and we expect it to be even worse this month (Refinery A)." "A dispatched worker at the Qingdao factory in China was quarantined at home, causing disruptions in the import of Chinese materials and difficulties in exporting domestic products to Europe and the United States (Construction Material B official)." "My sales dropped by more than 15% compared to usual because my business trip to China was blocked (Semiconductor Equipment Company C)."

Although export companies are suffering from the novel coronavirus disease (COVID-19) crisis, there are criticisms that the government’s export measures, which focus on increasing trade finance, have low effectiveness. Companies urgently need customized measures by industry, and if that is difficult, they appeal for bold regulatory relaxation to increase labor flexibility so they can prepare for demand recovery after COVID-19.

According to the Ministry of Trade, Industry and Energy on the 19th, the government plans to inject a total of 260.3 trillion won this year by adding 3.1 trillion won to trade finance. The main points are to continuously monitor the business situation of export companies, establish logistics and customs clearance management systems, and support export marketing by holding video conferences through KOTRA. Recently, the World Health Organization (WHO) declared COVID-19 a pandemic, worsening the situation, but the government presented support measures focused on budget increases through supplementary budgets as before. In this supplementary budget, the government only added 50 billion won for early cash conversion support for export bonds.

In response, export companies said that although they understand the government’s early fiscal execution despite the burden on the people, the measures do not resonate with them. A shipping industry official said, "90% of ship orders are financed through ship financing, and while it is good to receive guarantees from highly creditworthy institutions like the Korea Ocean Business Corporation, the interest rates are quite high," adding, "The government’s export support policy requires detailed measures, but increasing the budget does not lower interest rates in the financial sector, so it is difficult to say the government has properly met the detailed needs of companies."

Experts and companies in the automobile, aviation, refining, and travel industries advised that the government should shift its focus from budget increases to helping expand labor flexibility for companies. An official from the automobile industry said, "Apart from the government’s reduction of individual consumption tax, I cannot recall any customized support measures presented for the automobile industry," and added, "If it is difficult to present sharp support measures other than budget increases, I hope the government helps resolve labor-management issues in preparation for demand recovery in China and other countries after COVID-19 eases."

Professor Heo Yoon of Sogang University Graduate School of International Studies also urged, "The government should not only increase trade finance budgets and attract returning companies but also implement support policies to strengthen companies’ long-term fundamentals by postponing the application of the 52-hour workweek system, temporarily freezing the minimum wage, and enhancing labor flexibility."

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