Prime Minister Jeong Sye-gyun: "We Will Supplement Financial Support for Low Credit Rating Companies"

On the 29th, at the 3rd Industrial Development Forum held in the Grand Ballroom of COEX, Gangnam-gu, Seoul, Prime Minister Chung Sye-kyun delivered a congratulatory message via video. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Kim Hyewon] The government has expressed its intention to expand financial support for low-credit rating companies (B+ rating or below) struggling with management difficulties due to the impact of the novel coronavirus disease (COVID-19). It has been identified that the urgent liquidity needed in five major industries?electronics and telecommunications, automobiles, machinery, textiles, and petrochemicals?exceeds 105 trillion won.

At the '3rd Industrial Development Forum' held on the 29th at COEX in Samseong-dong, Gangnam-gu, Seoul, hosted by 26 economic and industry-specific organizations including the Korea Automobile Industry Association, the Federation of Medium-sized Enterprises, the Semiconductor Industry Association, and the Bio Association, the theme was 'Post-COVID Vision and Tasks by Key Industries.'

Prime Minister Chung Sye-kyun said in a video congratulatory message, "A sip of water is important when needed," adding, "We will supplement short-term measures so that companies can endure immediately." He continued, "The government will check to ensure that employment and financial support programs do not miss the timing or create blind spots on the ground, and will supplement financial support measures so that small and medium-sized partner companies with low credit can maintain employment and overcome the crisis."

This is interpreted as the government preparing additional financial support measures targeting low-credit rating companies in COVID-19 affected sectors such as electronics, shipbuilding, and textiles, following the launch of a 40 trillion won Industrial Stabilization Fund (ISF) for financial support of key industries like aviation and shipping the previous day, and the decision to provide a 500 billion won scale special mutual guarantee to supply liquidity to automobile parts companies.

According to a survey conducted by the 26 co-hosting organizations on the day, the five major industries?electronics and telecommunications (50 trillion won), automobiles (32.8 trillion won), machinery (15.5 trillion won), textiles (4.6 trillion won), and petrochemicals (2.4 trillion won)?face short-term liquidity difficulties amounting to 105.3 trillion won due to the direct impact of COVID-19. Chung Manki, chairman of the Korea Automobile Industry Association, emphasized, "The 40 trillion won Industrial Stabilization Fund and the scale of special guarantees by industry should be further expanded if necessary."

Kang Hogap, chairman of the Federation of Medium-sized Enterprises, also pointed out, "To support short-term survival, it is necessary to prepare seamless support policies starting with industry-specific tailored measures, including companies whose credit ratings have suddenly dropped and overseas local subsidiaries that are in blind spots of support."