'Key to Defense Export' Mercury Law Likely to Be Processed Today [Yang Nak-gyu's Defence Club]

The Export-Import Bank Act (hereinafter referred to as the Exim Bank Act) is expected to be amended. The core of the amendment is to raise the statutory capital limit of the Korea Export-Import Bank. If the amendment passes the plenary session on the 29th, the capital limit of the Exim Bank will increase from 15 trillion won to 25 trillion won, easing the way for defense exports to Poland.

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According to a defense industry official on the 29th, “If the amendment to the Exim Bank Act passes the National Assembly’s Judiciary Committee in the morning, it is highly likely to be processed at the plenary session in the afternoon.” The National Assembly plans to hold a plenary session on the afternoon of the 29th to submit and vote on the amendment to the Export-Import Bank Act and the amendment to the Housing Act.

So far, the defense industry has faced difficulties in defense exports because the current law limits the Exim Bank’s capital to only 15 trillion won. In the case of Poland, most of this amount was exhausted in the first export contract. The industry has consistently requested the National Assembly to amend the Exim Bank Act for defense exports. However, with the general election approaching, the processing in the National Assembly was delayed for more than six months. There were even concerns that if the amendment to the Exim Bank Act was not processed in the National Assembly, the second export contract with Poland could be reduced or canceled.

If the amendment to the Exim Bank Act passes the National Assembly hurdle on this day, exports to Poland will proceed smoothly. An additional 4 trillion won in credit can be extended, and if financial support is provided together with the Korea Trade Insurance Corporation, a total loan of about 8 trillion won will be possible. Since the basic conditions to negotiate the second contract have been created, arms export negotiations can regain momentum.

The pace of defense companies will also quicken. Hanwha Aerospace plans to actively discuss contracts for the remaining 308 units, including local production in Poland. Hyundai Rotem will specify contracts including local production in Poland, royalties, and technology transfer after assessing the scale of policy fund support, as it involves K2 technology transfer. Exports of ‘K-Defense’ including Poland are also expected to gain momentum. LIG Nex1, targeting the Middle East with Cheongung-II, also plans to launch an offensive.

A defense industry official said, “If it is not passed in the 21st National Assembly, the bill will have to be prepared again from scratch in the next National Assembly, which will inevitably have a huge negative impact on defense exports,” adding, “We are watching tensely until it passes the plenary session.”

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