Trade Finance Supply of 134 Trillion KRW in Second Half... Full Support for Exporters' Liquidity

Record-breaking '316 trillion+α' investment... Customized support for vulnerable companies and industries
Following the 3rd supplementary budget increase in trade insurance fund, 'focused firepower'

Prime Minister Jeong Sye-gyun. / Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Moon Chaeseok] The government will supply 134 trillion won in trade finance in the second half of the year to support liquidity 확보 for export companies. This is an extension of the plan to allocate a record-high 316 trillion won+α in trade finance support funds this year, and the Ministry of Trade, Industry and Energy's request for an increase of 327.1 billion won in the trade insurance fund in the 3rd supplementary budget proposal.

On the 10th at 2 p.m., the government held the '2020 2nd Expanded Trade Strategy Coordination Meeting' at the Government Seoul Office, chaired by Prime Minister Chung Sye-kyun, to discuss and finalize measures to revitalize exports centered on regions and the field.

[Image source=Yonhap News]

Since last year, before the outbreak of the novel coronavirus infection (COVID-19), the government declared in February, a month with favorable conditions such as working days, that it would "definitely turn exports positive," and increased this year's trade finance support amount to a record 260.3 trillion won. Subsequently, through the 1st Strategy Coordination Meeting in February and the 4th Emergency Economic Meeting in April, the trade finance support fund was increased to 316 trillion won+α, and on the 3rd, an additional 327.1 billion won increase in the trade insurance fund was requested to the National Assembly in the 3rd supplementary budget.

While the 'concentration of firepower' policy remains, the 2nd coordination meeting announced tailored liquidity support for vulnerable industries and companies, which is different from before. Based on 126 difficulties and suggestions from 17 local governments and a survey of 722 export companies conducted by the Korea International Trade Association, seven major policies were devised.

Specifically, these include ▲strengthening emergency support for liquidity crisis companies ▲enhancing three major marketing strategies for promising post-COVID items ▲advancing untact (non-face-to-face) export support ▲supporting overseas economic recovery projects ▲facilitating free movement of export goods and businesspeople ▲resolving core difficulties and protecting production bases ▲strengthening export infrastructure.

Source: Ministry of Trade, Industry and Energy

The Korea Trade Insurance Corporation (K-sure), Korea Credit Guarantee Fund (KODIT), and Korea Technology Finance Corporation (KOTEC) jointly established an 'Emergency Support Program for Liquidity Crisis Companies' to provide 200 billion won in support. K-sure will invest 100 billion won, and KODIT and KOTEC will each invest 50 billion won. After KODIT and KOTEC review applications and guarantee part of the requested amount, K-sure will conduct a simplified review and provide additional guarantees. Up to 800 million won per company (KODIT and KOTEC 500 million won + K-sure 300 million won) will be supported.

134 trillion won in trade finance will be rapidly supplied in the second half of the year. If the 3rd supplementary budget passes the National Assembly, a total of 717.1 billion won (K-sure contribution 327.1 billion won + Export-Import Bank of Korea investment 390 billion won) will be promptly injected for regional export companies, including maturity extensions, insurance and guarantee fee reductions, and early cash conversion of export receivables.

Emergency management stabilization support for export companies will be expanded using supplementary budgets, fund changes, and trade promotion fund support. The trade promotion fund for emergency management stabilization will increase by 20 billion won from 73 billion won to 93 billion won this year.

[Image source=Yonhap News]

Support by industry will be strengthened, including the rapid operation of a special mutual growth guarantee for automobile parts companies. A guarantee program supporting the automobile parts industry based on contributions from completed car manufacturers, the government, and local governments will be launched early. An agreement will be signed on the 11th. For shipbuilding, production financing will continue and additional support will be provided; if delivery delays occur, maturity extensions for production financing will be implemented.

Exports of promising post-COVID items such as quarantine, home economy, and digital products will be supported through three major marketing strategies: online and offline marketing, national brand linkage, and package support. Untact export support will be advanced through premium online exhibitions, non-face-to-face export infrastructure using AI and big data, and utilization of e-commerce.

The government, support agencies, and the private sector will form a pan-government support group to assist overseas expansion in promising fields such as digital, healthcare, and eco-friendly sectors. Specific promising items will be identified for each project, such as eco-friendly (hydrogen economy) and manufacturing equipment (smart factories and ICT), and customized marketing support will be strengthened.

On the 26th of last month, Korean Air passenger planes were parked at the Gimpo Airport apron in Gangseo-gu, Seoul. Photo by Jinhyung Kang aymsdream@

Logistics transport will be resolved through in-flight transport permissions, and difficulties in entry and exit of businesspeople will be alleviated focusing on the 'Korea-China Rapid Passage' model. Measures such as extending the period for special employment support industries to aid shipbuilding recovery will be considered, and necessary support will be provided to enhance chemical safety field compliance. Customized export support will be provided considering regional conditions. For example, areas designated as special employment crisis or industrial crisis zones will utilize linked regional export data.

Prime Minister Chung emphasized, "We must take this as an opportunity to transform our economy into a 'jar-shaped economy' with a strong middle after COVID-19," adding, "Mid-sized companies creating quality jobs, venture companies with technological capabilities, and strong small and medium enterprises exporting world-class products should become the core of our economy, which is an essential task for inclusive innovative growth and leading the 4th Industrial Revolution."

He continued, "We plan to concentrate all government capabilities to use the COVID-19 crisis as an opportunity to transition to a jar-shaped economy," and added, "With the world watching us after COVID-19, if we pool our wisdom, we can set a global example not only in K-quarantine but also in the coexistence of quarantine and economy."

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

Minister of Trade, Industry and Energy Sung Yun-mo said, "To respond to an unprecedented crisis and prepare for the post-COVID era, we have prepared bottom-up and customized measures based on the opinions of 17 local governments and 722 export companies centered on 'regional and field demand,'" adding, "Thanks to the achievements of K-quarantine, Korea has emerged as a safe global production base, and based on this, we will wisely overcome the current crisis and work together to create momentum for export recovery in the second half of the year."

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