Exports in Crisis Amid Prolonged Middle East War... Government Steps Up On-Site Support for Logistics and Liquidity

Meeting Held for Eight Major Industries Including Semiconductors and Automobiles
Concerns Grow over Soaring Freight Rates and Delayed Payments
Logistics Vouchers and 24.2 Trillion Won in Financial Support

Fresh platform filled with containers at Gamman Pier. Yonhap News

The government has stepped in directly to address on-site difficulties faced by key industries such as semiconductors and automobiles, in order to minimize the export shock resulting from the prolonged Middle East war.

On March 26, the Ministry of Trade, Industry and Energy held a meeting with major export companies at Korea Trade Insurance Corporation, presided over by Trade Policy Director Na Seonghwa, to review export conditions and outlook by sector following the Middle East war. This meeting was a follow-up to the emergency meeting chaired by Trade Minister Yeo Han-koo on March 11, and was organized to assess the effectiveness of policies and to fill any gaps in support measures.

Companies from eight core sectors attended the meeting, including semiconductors, automobiles, general machinery, petroleum products, petrochemicals, steel, biohealth, and displays. The companies reported that due to geopolitical uncertainties such as the potential blockade of the Strait of Hormuz, maritime freight rates and war risk surcharges have soared, leading to a significant increase in logistics costs. In addition, they raised complex challenges such as difficulties in securing financing due to heightened external risks, possible delays in payment settlements, and instability in raw material supplies.

The government plans to accelerate the implementation of logistics and liquidity support programs based on feedback from the field. To reduce the burden of export logistics costs, emergency voucher support will continue. The Ministry of Trade, Industry and Energy is providing emergency logistics vouchers worth 8 billion won, which are being accepted through the end of this month, to cover not only international shipping costs but also return shipping, war risk surcharges, and detour transport costs. In particular, a fast-track system is in place for companies with a high proportion of exports to the Middle East, issuing vouchers within three days of application; as of March 24, 44 companies have benefited from this support. The Ministry of SMEs and Startups has also launched an emergency logistics voucher program worth 10.5 billion won since March 20.

Liquidity support will also be significantly expanded. The government plans to swiftly provide a total of 24.2 trillion won in emergency funds through policy finance institutions. The Korea Trade Insurance Corporation will double the guarantee limit for working capital for companies exporting to the Middle East and strengthen financial support, while the scale of import insurance for industries urgently needing raw materials, such as petrochemicals, has been increased from 2.8 trillion won last year to 3.4 trillion won this year.

The Financial Services Commission is also operating financial support programs worth approximately 20.3 trillion won through policy finance institutions such as the Korea Development Bank and the Export-Import Bank of Korea, and the Ministry of SMEs and Startups is supporting export companies by utilizing emergency management stabilization funds and other measures.

The government will also strengthen its whole-of-government response system to swiftly resolve the difficulties faced by export companies. Through collaboration between KOTRA's 'Middle East War Emergency Response Desk,' the Korea International Trade Association's Emergency Response Team for Logistics Constraints, and 15 export support centers nationwide, information will be shared locally and company difficulties will be addressed. Cooperation with related ministries, such as the Ministry of Oceans and Fisheries and the Financial Services Commission, will also be expanded to enhance the response to logistics and financial issues.

In addition, the 'Middle East Situation Supply Chain Support Center,' which has been operating since March 23, will closely monitor the supply and demand of products that are highly dependent on the Middle East and industries expected to experience cascading effects, and will strengthen one-stop support to resolve difficulties.

The government also plans to expand its support capacity through a supplementary budget in the future. If damage worsens due to the prolonged instability in the Middle East, additional fiscal support will be provided to alleviate the burden on export companies.

Director Na commented, "While it is important to devise swift measures, it is even more important that these measures work properly on the ground," adding, "We will thoroughly monitor every step of the process to ensure that the emergency export vouchers and trade insurance packages are genuinely helpful to companies."

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