[2021 Economic Policy] Comprehensive Support for Corporate Business Restructuring... Three Types of Incentives Including Tax and R&D Provided

Kim Yong-beom, First Vice Minister of Strategy and Finance (center), is presenting the main points at the detailed briefing on the '2021 Economic Policy Direction' held at the Sejong Government Complex on the 14th.

[Asia Economy Reporter Kwangho Lee] The government is launching comprehensive support for business restructuring to enhance corporate competitiveness. To facilitate smooth corporate financing, the purchase period of the special purpose vehicle (SPV) for corporate bonds and commercial papers (CP), including low credit ratings, will be extended by six months until July next year. Additionally, to revitalize business restructuring after the COVID-19 pandemic, three types of incentives?tax, research and development (R&D), and policy finance?will be provided, and measures will be prepared to establish a proactive restructuring system centered on the capital market in preparation for the post-COVID era.

On the 17th, the government held the National Economic Advisory Council chaired by President Moon Jae-in at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul, where the '2021 Economic Policy Direction' including these measures was finalized and announced.

◆ Extension of SPV purchase for low-credit corporate bonds and CP = First, to resolve corporate management difficulties, the purchase period of the low-credit corporate bonds and CP SPV will be extended by six months until July next year, and financial support such as the issuance of securitization company guarantees (P-CBO) and strengthening support for low-credit companies will continue.

Moreover, policy finance for small and medium-sized enterprises (SMEs) and mid-sized companies will be expanded to KRW 302 trillion (up from KRW 290 trillion this year), and the credit joint guarantee program will be significantly increased to KRW 300 billion.

The aviation industry, which has suffered greatly due to a sharp decline in passenger demand, will receive support to alleviate financial difficulties considering its industrial contribution. The shipping industry will continue to implement COVID-19 support measures, including liquidity support such as emergency management funds and expansion of ship acquisition and post-delivery loans (S&LB).

Automotive parts companies will receive liquidity support alongside business restructuring assistance, and duty-free shops will be temporarily allowed to enable foreign buyers registered with customs to send duty-free goods via export delivery before departure.

◆ Provision of three types of incentives for business restructuring support = In addition, to activate business restructuring after COVID-19, three types of incentives?tax, R&D, and policy finance?will be provided for joint demand-supply business restructuring.

Efforts will be made to relax the conditions for the special tax deferral on capital gains from asset sales related to business restructuring plans, allowing a four-year grace period and three-year installment taxation deferral.

Furthermore, KRW 20 billion will be matched for business restructuring funds, and KRW 10 billion will be prioritized for dedicated R&D support.

Policy finance support will also be provided in conjunction with the 'Innovative Enterprise National Representative 1000' program for companies implementing joint business restructuring with high innovation and growth potential.

Additionally, the debt ratio requirement for maintaining capital gains tax deferral benefits will be relaxed,

and related regulations will be revised to facilitate smooth joint business restructuring between demand and supply companies within the industrial ecosystem.

◆ Establishment of a proactive restructuring system centered on the capital market = The government will also improve the restructuring system in preparation for the post-COVID-19 crisis.

Plans will be made to establish a proactive restructuring system centered on the capital market for the post-COVID era. Monitoring systems such as the main debtor group system, which considers market-based borrowing, will be actively utilized, and legal systems including the Corporate Restructuring Promotion Act, the Corporate Rehabilitation Act, and the Capital Market Act will be reviewed.

In addition, considering changes in the restructuring environment due to COVID-19 impacts, credit risk assessments will be conducted, and active post-management by main creditor banks will be encouraged.

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