Enforcement Decree of Special Act on Petrochemicals Passes Cabinet... Accelerating Industry Restructuring

Yeosu National Industrial Complex. Photo by Yonhap News

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A legal foundation has been established to support the restructuring of the petrochemical industry. The government plans to accelerate business restructuring by easing licensing and environmental regulations, as well as introducing special provisions for fair trade practices.

The Ministry of Trade, Industry and Energy announced on April 14 that the Cabinet has approved the enactment of the Enforcement Decree of the Special Act on Reinforcing the Competitiveness and Support of the Petrochemical Industry. This enforcement decree details the delegation provisions of the Special Act on Petrochemicals, promulgated in December last year, and includes various special measures and support plans to promote business restructuring and the transition to high value-added industries.

First, special provisions have been introduced to simplify licensing procedures during the restructuring process. In the case of establishing a new corporation, it is now possible to apply for registration as a petroleum importer and exporter even before the registration of incorporation, and the registration process for chemical substances has also been streamlined by allowing the new corporation to inherit existing registration details from the previous entity. These measures are designed to enable companies to proceed with restructuring more quickly.

There are also temporary relaxations of environmental regulations. For facilities subject to business restructuring, the obligation to install air pollutant prevention equipment can be deferred for a certain period. In cases where the division of a corporation or other restructuring activities necessitate changes in permitted emission standards, the existing standards may be maintained on an exceptional basis if unavoidable.

Special provisions related to the Fair Trade Act have also been clarified. The enforcement decree specifies the approval procedures, required documentation, and government review standards for joint activities by companies undergoing restructuring, as well as the requirements and procedures for prior notification and compliance regarding information exchange.

In addition, there will be reductions in technology fees and support for employment stability. Technology fees for national R&D projects may be reduced, and if a company requires employment retention, the Minister of Trade, Industry and Energy may recommend the company for priority support, which the Ministry of Employment and Labor will then prioritize in its assessment.

The government plans to implement the new system immediately upon the promulgation of the enforcement decree, thereby launching the full-scale restructuring of the petrochemical industry.

Minister of Trade, Industry and Energy Kim Jeonggwan stated, “The government and industry are making every effort to address the instability in naphtha supply caused by the current Middle East conflict. We will prioritize the supply of raw materials to prevent disruptions in the provision of essential items such as healthcare products and daily necessities.”

He added, “Improving the fundamental structure of the petrochemical industry can no longer be delayed. Based on this institutional foundation, we will provide active support to ensure that corporate restructuring proceeds without disruption.”

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