'Expansion of Financial Support' Comforted by President Moon... Auto, Steel, Shipbuilding Industries Appeal "Urgent"

Major Industry CEOs Meeting on the 21st... President Moon's Commitment to Jointly Protect 'Businesses and Jobs'

President Moon Jae-in is removing his mask before speaking at the 'Major Industry Meeting for Overcoming the Crisis' held on the 21st at the Trade Association Conference Room in Samseong-dong, Gangnam-gu, Seoul. [Image source=Yonhap News]

[Asia Economy Reporters Son Sun-hee, Hwang Yoon-joo] "We will definitely prevent companies from going bankrupt due to the shock of the novel coronavirus infection (COVID-19)." (Opening remarks at the 2nd Emergency Economic Meeting on March 24)

"Protecting jobs is a core task in overcoming the national crisis and the most urgent survival issue." (5th Emergency Economic Meeting on April 22)

President Moon Jae-in has repeatedly emphasized the key keywords of 'companies' and 'jobs' to overcome the 'economic wartime situation' caused by the COVID-19 crisis. The main subjects connecting these two keywords are the major domestic key industries. The 'Major Industry Meeting for Crisis Overcoming' held on the 21st was organized with the purpose of gathering the government and business sectors' will to overcome industrial crises and stabilize employment. In his opening remarks that day, President Moon emphasized, "We will devote all efforts to economic recovery, securing future competitiveness, protecting jobs, and expanding the employment safety net."

President Moon further stated that both our economy and companies are in crisis, appealing that "cooperation between the government and the business community, as well as cooperation among industries, between large and small businesses, and between labor and management, is urgently needed." He particularly stressed the need to catch two rabbits?saving jobs and revitalizing industry and the economy?with an extraordinary determination to protect the entire industrial ecosystem. President Moon also said, "We will swiftly promote the Korean New Deal," emphasizing that "because COVID-19 demands more bold and rapid changes in the digital economy era, we will become a strong player in the digital economy."

Previously, through five emergency economic meetings he presided over, President Moon decided to inject a total of 245 trillion won in funds. Among these, the 40 trillion won scale Key Industry Stabilization Fund was announced at the 5th Emergency Economic Meeting on the 22nd of last month, and the related laws and enforcement decrees were passed within 20 days. However, the detailed operation plan announced the day before limited the support target industries to 'aviation and shipping,' causing disappointment in the industry.

Following President Moon's announcement that the scope of fund support would be expanded that day, it is expected that industries such as machinery, automobiles, and shipbuilding may also be included in the future. However, this comes with the condition that "at least 90% of the number of workers as of May 1 must be maintained," and at least 10% of the support amount will be provided in the form of stock-linked securities (convertible bonds, bonds with warrants, etc.).

President Moon Jae-in is presiding over the 'Major Industry Meeting for Overcoming the Crisis' at the Korea International Trade Association conference room in Samseong-dong, Gangnam-gu, Seoul on the 21st.
[Image source=Yonhap News]

The domestic industrial sector is operating under an emergency management system, responding to the crisis through the sale of non-core assets and cost reduction. However, due to the prolonged slump in demand caused by the COVID-19 aftermath and economic recession, sales and operating profits have drastically decreased, making the situation very difficult.

In the automobile industry, overseas production lines have been gradually reopening this month, but normal operations have not been achieved. Especially, since the beginning of this month, many secondary suppliers' operating rates have fallen to around 30%, raising concerns about the collapse of the automobile industry ecosystem. In response, the Korea Automobile Industry Association is appealing to the government for liquidity support exceeding 32 trillion won to prevent a chain bankruptcy of automobile parts suppliers.

The steel industry is similarly sighing due to liquidity difficulties caused by sluggish demand in related industries and a sharp drop in exports. Accordingly, the industry has requested the government to expand liquidity support and include the steel industry in the Key Industry Stabilization Fund currently under discussion.

The shipbuilding industry is concerned about a cliff in orders until the first half of this year. The industry has requested the government for liquidity support, expansion of Refund Guarantee (RG), and simplification of entry procedures for foreign technical experts. They emphasize the need for production financing support and loans secured by ship delivery payments. The equipment industry urgently requests liquidity support such as extension of production financing maturity and expansion of working capital supply. The refining industry appeals for measures including tax support expansion, investment incentives, and deregulation.

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