Draft Fund Ultimately Only Extended Support Period... Low Utilization Controversy Likely to Continue

Extended for an additional 8 months until the end of the year

[Asia Economy Reporter Park Sun-mi] Although the deadline for financial support from the Industrial Stability Fund (ISF), which was originally scheduled to end at the end of April, has been extended by 8 months until the end of the year, the 'application threshold'?which has been criticized for being excessively high?will not be lowered, raising ongoing concerns about its effectiveness.

According to financial authorities on the 24th, at the 29th Industrial Stability Fund Operation Committee held on the 22nd, a partial amendment to the 'Industrial Stability Fund Operation Plan' was approved. The main amendments include the extension of the financial support period and the updating of some financial support conditions.

The support period for the ISF and the support program for partner companies has been extended by 8 months from the original deadline of April 30 to December 31 of this year. The salary freeze point for high-income executives receiving fund support was adjusted from 2019 to 2020, and the employment retention reference date was changed from May 1, 2020, to May 1, 2021, to reflect current realities.

For high-income (over 2 billion KRW) executives of companies receiving ISF support, salaries will be frozen at the 2020 level during the support period, and companies are obligated to maintain employment, keeping the number of employees at a maximum (at least 90%) as of May 1, 2021.

However, since the application threshold for the ISF will not be lowered, if no additional companies apply for support, the controversy over the effectiveness of the stringent ISF support conditions is expected to continue.

The ISF was launched in April last year with a scale of 40 trillion KRW to provide necessary funds to companies in nine industries hit by COVID-19, including aviation, shipping, automobile, shipbuilding, machinery, steel, refining, aircraft manufacturing, and petrochemicals. Support is limited to industries with over 300 employees and total borrowings exceeding 500 billion KRW that have been impacted by COVID-19, and companies must pass the ISF review committee’s screening, leading to criticism that the application requirements are too stringent.

So far, a total of 614 billion KRW has been supported, including 300 billion KRW and 32.1 billion KRW to Asiana Airlines and Jeju Air respectively, and 282.1 billion KRW to partner companies in the industrial sector. The utilization rate stands at about 1.5%.

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