Yoon: "We Will Supply 'Good Sneakers' Through Deregulation and Export Support" (Comprehensive)

Emergency Economic and Livelihood Meeting Live for Over 80 Minutes... Focused Discussion on Economic Revitalization Measures
Loosening Regulations and Increasing Support to Restore Livelihood Economy... "All Ministries to Support National Strategic Industries"

[Asia Economy Reporter Baek Kyunghwan] The 11th Emergency Economic and Livelihood Meeting, which was broadcast live for over 80 minutes, focused on two main pillars: deregulation and export expansion. The government's plan is to strengthen the foundational capacity for economic recovery in the livelihood sector by increasing investment in the industrial sector. On this day, President Yoon reiterated the government's operational policy so far by stating, "Since the launch of our government, we have managed the system so that the market operates autonomously under fair rules, and have ensured that an economy centered on companies and the private sector functions."

At the Emergency Economic and Livelihood Meeting held at the Yongsan Presidential Office building in the afternoon, President Yoon expressed his intention to create a foundation where companies can engage in management activities with creativity and autonomy under a fair market order by saying, "To help the private sector perform better, isn't it the government's role to provide better uniforms and sneakers?"

[Image source=Yonhap News]

◆Government begins full-scale deregulation= A representative example is the easing of real estate regulations, which had been handled cautiously since the new government took office. On this day, the government announced that starting next year, mortgage loans will be allowed for apartments priced over 1.5 billion KRW, and the loan-to-value ratio (LTV) cap for mortgage loans for one-homeowners will be relaxed to 50%. Currently, mortgage loans are prohibited for apartments exceeding 1.5 billion KRW in speculative and speculative overheating zones. The Financial Services Commission plans to allow mortgage loans for apartments over 1.5 billion KRW to non-homeowners and one-homeowners (conditional on disposing of existing homes) within these zones.

To reduce the financial burden on actual homebuyers, mid-term loans for apartments priced at 1.2 billion KRW or less will also be permitted. To cool down the overheated pre-sale market, since August 2016, the government has restricted mid-term loan guarantees from the Housing and Urban Guarantee Corporation (HUG) and Korea Housing Finance Corporation (HF) for homes priced over 900 million KRW. For homes priced above 900 million KRW, buyers had to cover the contract deposit and mid-term payments, which account for about 70% of the pre-sale price, without loans. However, over the six years since the introduction of the '900 million KRW regulation,' rising house prices have pushed the average pre-sale price of private apartments in Seoul from 20 million KRW to 28 million KRW per 3.3㎡, a 40% increase, leading to many criticisms that the loan restrictions were excessive.

President Yoon also drew attention by directly mentioning tax support. He said, "If tax credits or tax support are not provided, investments do not occur, but if bold benefits are given, investments increase." This was an additional directive following Deputy Prime Minister for Economy Choo Kyung-ho's response to Minister of SMEs and Startups Lee Young's request for 'tax support for venture investment funds,' stating, "We will generously support within the range that does not shake fiscal soundness."

President Yoon emphasized, "Other ministers should also convey difficulties to the Deputy Prime Minister for Economy or Financial Services Commission Chairman Kim Joo-hyun," and added, "The Minister of SMEs and Startups should strongly request the Ministry of Economy and Finance to significantly increase tax support."

◆Yoon: "Economic activities contracted due to high interest rates"... 50 trillion KRW support plan for SMEs= President Yoon confessed, "From the perspective of many entrepreneurs working on the ground, many are curious about what policies the government has to revitalize investment and economic activities, which are currently contracted due to high interest rates, and what plans will be established and implemented."

In consideration of this, the government announced a customized financial support plan totaling 50 trillion KRW for small and medium-sized enterprises (SMEs) struggling amid high interest rates, high prices, and high exchange rates. Financial Services Commission Chairman Kim Joo-hyun told President Yoon, "We are preparing a comprehensive support package worth 50 trillion KRW to prepare for potentially difficult situations for SMEs."

Looking at the details, first, 12 trillion KRW has been allocated to supply customized funds to SMEs experiencing temporary management difficulties. To address interest rate-related difficulties, 'preferential guarantee interest rate loans' for early-stage startups and 'fixed interest rate special loans' that can later be converted to variable rates will be provided. To respond to rising raw material prices, special working capital loans will be offered to affected companies, and special loans will be provided to companies introducing the delivery price linkage system (a system where fluctuations in raw material prices are reflected in the delivery price between primary contractors and subcontractors).

Measures to revitalize key industries such as semiconductors were also discussed. Minister of Trade, Industry and Energy Lee Chang-yang emphasized, "We will support the proper execution of the 340 trillion KRW investment planned by private companies in the semiconductor industry." Deputy Prime Minister Choo also introduced 1 trillion KRW in fiscal funds for the semiconductor sector included in next year's budget proposal.

In line with this, President Yoon stressed the need for "a comprehensive plan to stabilize the supply chain" regarding securing essential minerals required for the production of semiconductors and secondary batteries, emphasizing that timing is crucial. He also instructed the Ministry of Trade, Industry and Energy to "constantly monitor specific strategies and detailed situations regarding the supply chain and share them with other ministries and companies."

[Image source=Yonhap News]

◆Yoon: "Government ministries must focus on industry and exports"= Export expansion was another key issue President Yoon emphasized alongside deregulation on this day. He stated, "All government ministries should support and promote national strategic industries and work with the mindset that they are ministries dedicated to industry and exports."

The industrial sectors in focus are nuclear power and defense industries. President Yoon said, "Nuclear power and defense are related to national security," and added, "Energy security is important, and due to the Ukraine crisis, European countries are experiencing disruptions in Russian LNG supply, and because of rising oil prices, there is a strong will to return to nuclear power, which I felt at the NATO summit." He emphasized, "Since this is ultimately a nation-to-nation transaction, Korea Hydro & Nuclear Power and the government must work together."

President Yoon explained, "Defense and nuclear power tend to be handled as a single package, from construction to know-how," and gave examples, "Countries like Poland, the Czech Republic, and Middle Eastern countries view nuclear power and defense as a set and expect operation support for several years after export." He urged, "All ministries must unite to ensure that package exports of nuclear power and defense to the Middle East and Europe proceed smoothly, and the Ministry of Foreign Affairs and Ministry of Justice should review laws and systems related to these countries."

This is also why President Yoon emphasized, "The Ministry of Health and Welfare should be seen as an industry service related to health and welfare, the Ministry of National Defense should become the defense industry ministry, and the Ministry of Land, Infrastructure and Transport should act as the construction industry ministry, with all ministries supporting and promoting national strategic industries."

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