[Column] Timely Support Elusive for Gyean Fund, Is This Acceptable?

[Asia Economy Reporter Kim Hyo-jin] "Timely financial support for companies is more important than anything else."

This was a remark made by Eun Sung-soo, Chairman of the Financial Services Commission, at the launch ceremony of the Industrial Stabilization Fund (GISF) Operation Deliberation Committee held at the Industrial Bank of Korea in Yeouido on May 28. It has been about two months since the 40 trillion won GISF, which supplies liquidity to key industries hit by the COVID-19 pandemic, was activated. However, the first support target has yet to be decided.

Why is timely support not reaching companies whose cash flow has dried up due to liquidity crises? When the government decided to establish the GISF last April, it set a policy that "the main creditor banks must verify whether the applicant companies were already structurally insolvent before COVID-19." This clearly limits the purpose of the GISF to "supporting companies temporarily in crisis due to COVID-19."

Voices doubting the effectiveness of the system have been rising inside and outside the banking sector and business circles. Since the business environment, already difficult due to internal and external adversities such as the sharp increase in minimum wage, labor hour regulations, intensified global competition, and rising raw material costs, has worsened further due to COVID-19, it is unrealistic to judge whether a company "deserves support" solely based on the phenomenon of "COVID-19."

An executive in charge of corporate loans at a commercial bank lamented, "There are many companies that appear fine on the surface but are actually life-sustaining and marginal companies that survive by repeatedly extending loans." He also said, "Workout or voluntary agreement history will likely be the primary criteria, but it is very concerning to consider companies without such history as somewhat qualified."

Since public funds are involved, the threshold cannot be lowered recklessly. However, it is necessary to reconsider from a more long-term and comprehensive perspective. There must be reasons why companies in the relevant industries, including Korean Air, have not yet clearly expressed their intention to apply for support.

Recently, even the Korea Institute of Finance raised issues regarding the operation of the GISF, questioning whether it is possible to judge if a company was sound before COVID-19 solely based on workout history. The war against COVID-19 is not a fight lasting just a few months. Shouldn't we draw a bigger picture without compromising principles?

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