[2022 Economic Policy] Record High Exports Expected Again Next Year... Government to Reduce Logistics Costs and Support 261 Trillion Export Financing

Announcement of the 2022 Economic Policy Direction

2021 Export Value Expected to Reach a Record High of $643 Billion
Projected to Increase by 2% to $656 Billion Next Year

Temporary Vessels to be Deployed on Routes to the Americas and Europe Until Logistics Improve; Dedicated Shipping Space Continues for Small and Medium Shippers
'Logistics-Dedicated Export Voucher Program' to Continue Next Year

Export Financing to Reach KRW 261.2 Trillion Next Year, Up KRW 5.4 Trillion from This Year

(Photo) [Image source=Yonhap News]

[Asia Economy Reporter Joo Sang-don] The government expects Korean exports to continue their historic strong performance recorded this year with a 2% growth next year. To maintain this export momentum, the government will continue to operate a full support system to resolve logistics difficulties faced by export companies and plans to expand export financing by KRW 5.4 trillion compared to this year.

On the 20th, the Ministry of Economy and Finance announced the '2022 Economic Policy Direction' containing these details.

Exports in November this year amounted to $60.44 billion, a 32.1% increase compared to the same period last year, surpassing the previous highest export figure recorded in September ($55.92 billion) by $4.52 billion. This marks a new record high in just two months. Consequently, cumulative exports reached $583.8 billion, a 26.6% increase year-on-year, achieving the highest cumulative total for November. The government forecasts that by mid-December, the annual export value will exceed $600 billion and surpass the previous record set in 2018 ($604.9 billion), reaching a historic high of $643 billion.

Although the export growth rate is expected to slow compared to this year, the positive trend is anticipated to continue next year. Exports are projected to reach $656 billion. Lee Ik-yeok, First Vice Minister of the Ministry of Economy and Finance, stated, "The export growth rate next year is expected to be 2%, with a trade surplus of around $80 billion. While the export growth momentum is expected to be maintained, the growth rate will significantly slow due to the high base effect from this year's steep increase."

The government plans to provide full support through finance and tax measures to sustain the export boom. Until logistics conditions improve, temporary vessels will be deployed on major routes such as the Americas and Europe, and dedicated shipping space will continue to be provided for small and medium shippers. Since September this year, the government has deployed more than six temporary vessels per month and provided dedicated shipping space of 1,300 TEU (1 TEU equals one 6-meter container) for small and medium shippers.

Support to reduce cost burdens caused by prolonged logistics difficulties will also continue. The logistics-dedicated export voucher program, which supports up to KRW 20 million per company (with a subsidy rate of up to 70%) for sea and air freight costs, will be maintained in 2022 (KRW 17 billion). Special financial support such as logistics damage special loans (KRW 150 billion) from the Korea Eximbank and preferential trade insurance and guarantees from the Korea Trade Insurance Corporation will also continue through the first half of next year.

Incentives to encourage voluntary long-term contracts in the private sector will be strengthened. The government is considering introducing a model where industry associations or private logistics brokers identify the demand of small and medium shippers and mediate long-term transportation contracts. To ensure stable contract fulfillment between carriers and shippers who enter into long-term contracts, the provision of guarantee products is also under review. Companies certified as excellent carriers and shippers based on long-term contract performance will benefit from eased corporate tax reduction requirements (from KRW 10 billion or more in sales in the previous tax year to also include those with less than KRW 10 billion in sales) and expanded export credit guarantee limits.

The government will also explore various support measures to sustain export momentum. Export financing will be expanded by KRW 5.4 trillion from this year to KRW 261.2 trillion, focusing on support for small and medium enterprises, mid-sized companies, and new industry sectors. Additionally, for the 321 'Export Do Dream Companies' (promising small exporters) selected this month, the government will link various supports such as consulting, funding, and marketing.

Exports of agricultural and marine products will receive strengthened customized support for promising items and sectors. Dedicated air and shipping space will be provided for strawberries, grapes, seaweed, and other agricultural and marine products, and localization support will focus on traditional and processed foods with high overseas demand.

Furthermore, to ensure continued support for businesspeople's entry and exit until the end of the COVID-19 pandemic, the 'Comprehensive Support Center for Businesspeople's Entry and Exit' will have its operation period extended until the end of next year. The government plans to prepare supplementary measures linked to phased normalization, such as simplifying quarantine exemption procedures and reducing the number of mandatory PCR tests (up to 4 times) for vaccinated individuals.

International cooperation to expand the export base will also be strengthened. Korea will pursue accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which includes 11 Asia-Pacific countries such as Japan, Australia, and New Zealand. Additionally, bilateral economic cooperation with key partner countries will be reinforced, focusing on core areas such as supply chain restructuring, climate change response, and infrastructure.

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