[The Crisis of Heavy Industries] "Customized Support Needed for Refining, Shipbuilding, and Steel Sectors"

[Asia Economy Reporter Hwang Yoon-joo] The refining, shipbuilding, and steel industries are hoping for the temporary allowance of customized policies that reduce corporate burdens. This is because the priorities for overcoming the novel coronavirus disease (COVID-19) crisis differ by industry.

The refining industry must pay taxes such as fuel tax and customs duties, which were deferred in June, all at once by the end of this month. The fuel tax to be paid by the four major refiners is estimated to be about 1.5 trillion won. Previously, the government deferred the payment of fuel tax and petroleum import charges for sales in April by three months to support the refining industry. Accordingly, from July, payments for April, May, and June are being made together with those for July, August, and September.

A refining industry official explained, "Since taxes are imposed on imported crude oil and refiners include taxes in the sales price, simply postponing the tax payment timing is a great help in terms of liquidity," adding, "It is like paying taxes in advance, so if the recovery of petroleum product sales is delayed as it is now, it becomes a burden."

The government has stated that there will be no further deferral of fuel tax payments. This is because while the refining industry earnestly wants a tax payment deferral, the government is also desperate to secure tax revenue. The government has finalized the fourth supplementary budget, including the second disaster relief fund, and the National Assembly is scheduled to begin reviewing the supplementary budget starting today.

The steel industry’s biggest concern is the reduction of electricity charges. Electricity costs are known to account for about 10-15% of sales costs. Industrial electricity rates vary by summer and winter rates, as well as by daytime and nighttime rates. The daytime electricity rate in summer is the most expensive. This year, due to a prolonged rainy season and typhoons, the summer off-season has been 2-3 weeks longer than usual, and the steel industry explains that the fixed cost burden has increased due to decreased sales volume.

A steel industry official said, "Reducing industrial electricity charges is a very sensitive issue, so we are cautious even to mention it, but temporary support measures such as tax rate reductions are needed until we overcome the COVID-19 crisis."

The shipbuilding industry is requesting that the unit period for the flexible working hour system for certain job groups be extended from the current three months to one year. Last year, the National Assembly proposed an amendment to the Labor Standards Act to extend the unit period of the flexible working hour system to six months, but it is still pending. This is because the nature of the job requires working from a minimum of two days to a month during sea trials after shipbuilding is completed, which may violate current laws. A shipbuilding industry official appealed, "Even if the amendment to the Labor Standards Act passes, it is urgent to have an exemption applied to certain job groups in the shipbuilding industry so that work is not prevented when orders come in."

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