Financial Authorities Review Extension of Draft Fund Deadlines and Relaxation of Application Requirements

Possibility of 1-Year Extension for Application Deadline Ending Late April
Support Expansion Plans Also Under Review by Adjusting Application Conditions

[Asia Economy Reporter Park Sun-mi] Financial authorities are considering extending the application deadline for the Industrial Stabilization Fund and relaxing the application requirements. They plan to supply 1 trillion KRW in liquidity through a corporate asset sales support program.

According to the government and financial authorities on the 15th, the Financial Services Commission has decided to extend the application deadline for the Industrial Stabilization Fund, which was set to expire at the end of April this year, and has begun discussions on relaxing the application requirements as well. Since agreement with related ministries and approval from the review committee must be completed before the fund application expiration date, a rough outline is expected to be finalized as early as the beginning of next month.

A senior official from the Financial Services Commission said, "Since government policies are usually set and implemented on a one-year basis, there is a possibility that the application deadline for the Industrial Stabilization Fund will be extended by at least one year," adding, "Along with the extension of the application deadline, we are also looking into ways to allow more companies to apply for the fund."

There is a growing consensus that the Industrial Stabilization Fund should be utilized more effectively to provide practical support for companies' recovery after COVID-19, increasing the likelihood that the eligibility criteria for supported companies will be lowered.

Industrial Stabilization Fund launched with 40 trillion KRW... support amounts to only 614 billion KRW

The Industrial Stabilization Fund was launched last May with a scale of 40 trillion KRW, but so far has only provided a total of 614 billion KRW in support, including 300 billion KRW and 32.1 billion KRW to Asiana Airlines and Jeju Air respectively, and 282.1 billion KRW to period industry partner companies. The fund’s application conditions, which require meeting all three criteria of total borrowings exceeding 500 billion KRW, having more than 300 employees, and being affected by COVID-19, have been criticized for limiting utilization to about 1.5%.

An official said, "Rather than expanding the nine supported industries?aviation, shipping, automotive, shipbuilding, machinery, steel, refining, aircraft manufacturing, petrochemicals?or lowering the existing eligibility criteria for supported companies, we are considering maintaining the current conditions but adding additional requirements for support." He added, "The basic principle that the Industrial Stabilization Fund supports companies temporarily struggling due to COVID-19 will be upheld."

However, the Ministry of Trade, Industry and Energy is reportedly suggesting during a series of consultations with financial authorities that instead of operating the Industrial Stabilization Fund tightly, it would be necessary to consider expanding the supported industries to allow broader support if there is demand.

Meanwhile, the Financial Services Commission plans to actively utilize the "Corporate Asset Sales Support Program," operated by the Korea Asset Management Corporation (KAMCO) since July last year, again this year. Through this program, KAMCO has acquired real estate, ships, and other assets owned by companies experiencing temporary management difficulties due to COVID-19, providing 1.1 trillion KRW in support.

A Financial Services Commission official said, "Going forward, to support corporate asset sales demand and market-driven restructuring, we will strengthen linkages with other programs such as the Corporate Structural Innovation Fund, equipment asset acquisition through KAMCO, and package-type rehabilitation support programs (DIP financing), and operate them so that companies can receive sufficient support at the desired time and in the desired form."

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