Save Ssangyong Motor Suppliers... Government Provides Emergency Liquidity Support

Financial Support Including Maturity Extension and Principal Repayment Deferral... Cash Payment Policies for Parts Suppliers Should Be Expanded

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] As major shareholder Mahindra withdrew from the sale negotiations, Ssangyong Motor ultimately pulled out the pre-packaged plan (P-plan) card. The government decided to expand liquidity support for Ssangyong Motor's parts suppliers. This measure aims to prevent a chain bankruptcy of parts suppliers due to Ssangyong Motor's management difficulties.

On the 29th, the Ministry of Trade, Industry and Energy held the 26th Ministerial Meeting on Strengthening Industrial Competitiveness and announced that it would expand liquidity support such as maturity extensions and principal and interest repayment deferrals for Ssangyong Motor's parts suppliers.

First, through policy financial institutions and commercial banks, support such as maturity extensions and principal and interest repayment deferrals will be provided to suppliers. Korea Development Bank, Industrial Bank of Korea, and Korea Credit Guarantee Fund will support the entire main industry (automobile, etc.) suppliers through currently operated support programs, and will consider securing additional limits if necessary. For national taxes, payment deadlines and seizure/sale deferrals will be supported upon application, and for customs duties, unsecured payment extensions and installment payment support will be maintained.

Ssangyong Motor's parts suppliers have welcomed the government's policy to some extent but insist that more cash support is needed.

This is because their ability to mobilize funds has weakened since Ssangyong Motor's crisis, and they currently have to pay cash to procure raw materials. Choi Byung-hoon, Senior Vice Chairman of the Ssangyong Motor Cooperative Emergency Committee, said, "The government's policy may be somewhat helpful, but it does not significantly deviate from the support policies that have been issued so far," and pointed out, "Cash payment policies need to be expanded."

In particular, there are appeals that for preventing the chain bankruptcy of parts suppliers, the cash flow between Ssangyong Motor and parts suppliers must be smooth. Vice Chairman Choi emphasized, "The government or the main creditor, Korea Development Bank, which holds collateral on Ssangyong Motor's land, should increase loan amounts and provide active support to ensure continuous cash flow."

The Ssangyong Motor Cooperative, composed of about 350 small and medium-sized parts suppliers, estimates that the unpaid delivery payments since October last year exceed 500 billion won.

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