Fear of Domino Recession in ICT Industry Due to COVID-19... Government Considers Technology Fee Deferral and Loans

Work Stoppage, Chain Production Process Shutdown Realized
ICT Companies Face Domino Shutdown Fear with Complete Cancellation of Investment Attraction
Government to Fully Implement Support Systems Including Technology Fee Reduction and Fiscal Execution

[Asia Economy Reporter Koo Chae-eun] The spread of the novel coronavirus originating from China is raising concerns about the suspension of operations and subsequent production delays in ICT companies. In response, the government plans to support the ICT industry through measures such as technology fee reductions, loans, and expedited fiscal spending.

On the 21st, the Ministry of Science and ICT announced the 'COVID-19 ICT Support Plan' based on these points. A ministry official explained, "China accounts for 68.5% of production dependency in the ICT industry, and due to the impact of COVID-19, both ICT exports and imports are decreasing, prompting us to introduce support measures."

Currently, the business situation of ICT companies is at a critical level. Telecommunications equipment companies are taking a direct hit to sales due to reduced production by Chinese partners. Bio companies are facing uncertainty as local Chinese government investment attraction efforts have failed. Software companies are experiencing business suspensions due to extended holidays and remote work policies at their Chinese subsidiaries.

Accordingly, the government plans to take short-term measures for ICT companies, including ▲ deferral and reduction of technology fees, and ▲ shortening the review period for technology development fund loans. The aim is to support ICT R&D companies affected by COVID-19. Additionally, the government will promote ▲ rapid execution of fiscal projects under the Ministry of Science and ICT, ▲ facilitation of transactions between large and small ICT companies, and ▲ diversification of export destinations for ICT companies. Furthermore, efforts will be made to stabilize the global supply chain. The government also plans to provide guidance to the industry and coordinate with related ministries to ensure smooth support for the ICT sector through management stabilization funds and export vouchers.

China accounted for a very high proportion of global ICT industry production at 68.5% as of last year. The spread of COVID-19 has impacted both exports and imports. From the beginning of this month to the 12th, the average daily ICT exports to China were $170 million, a decrease of $30 million compared to January. The average daily ICT imports also decreased by $60 million from $150 million in January to $90 million.