Operation Deliberation Committee Fully Activated
"All Members Recognize Emergency Situation
Support Methods to Proceed Quickly"
Applications Expected as Early as Next Week
Ssangyong Motor's Eligibility Unclear
[Asia Economy Reporter Kangwook Cho] Kim Joo-hoon, chairman of the Operation Deliberation Committee (KDI Research Fellow) responsible for managing the 40 trillion won-scale Industrial Stability Fund (GISF), emphasized on the 4th, "We will unconditionally proceed with corporate support within this month."
On the same day, Chairman Kim said in a phone interview with Asia Economy, "We are well aware that many companies are currently struggling with management difficulties and are desperate for support."
He also stated, "All committee members share the recognition that the current situation is an emergency and that corporate support is an urgent matter," adding, "We will compress the process of establishing basic regulations such as support limits and methods as much as possible and proceed quickly."
The GISF Operation Deliberation Committee, launched on the 28th of last month, held its second meeting on the morning of the same day. It is known that the meeting discussed key issues that must be decided before the future corporate support process, such as bond issuance, corporate application reception, and funding support conditions. An official from the Korea Development Bank explained, "The first meeting held on the day of the inauguration was mainly an introductory session since it was the first gathering right after the appointment of new members," and added, "This second meeting is the official start of support for companies struggling with management difficulties due to the COVID-19 pandemic."
The committee plans to hold meetings every Thursday. In particular, if urgent decisions are needed, they will meet regardless of the schedule to provide timely support. Chairman Kim emphasized, "Currently, since we need to establish a broad framework, we cannot confirm the exact start date, but the principle of proceeding as quickly as possible remains unchanged," and added, "We plan to hold meetings as frequently as possible and will definitely not extend beyond this month."
Another committee member said, "We also need to review matters related to the issuance of fund bonds that raise the GISF resources," adding, "Since there are many urgent matters to handle at the initial stage, meetings will be held frequently."
With the full operation of the Operation Deliberation Committee, there are expectations that individual companies may be able to start applying for the GISF as early as next week. Previously, financial authorities announced that they would begin the first bond issuance for fund raising early this month and start accepting corporate applications. Given that many companies are experiencing liquidity crises due to COVID-19, there is keen interest in which companies will apply. The market is also paying close attention to whether the applying companies will be approved for support.
The government has initially designated the aviation and shipping industries as targets for GISF support. However, other industries may be added after inter-ministerial consultations. The Financial Services Commission targets industries that it recognizes as requiring fund support due to significant impacts on the national economy, employment stability, and national security caused by severe sales declines or management difficulties.
In the case of Ssangyong Motor, which was reportedly preparing to apply for 200 billion won in fund support, it is unclear whether it qualifies for support. For fund support, the main creditor bank must verify the COVID-19 damage and submit an opinion to the Korea Development Bank, but the cause of Ssangyong Motor’s management difficulties is ambiguous.
A financial sector official said, "Financial authorities also said that the cause of Ssangyong Motor’s crisis needs to be examined and have left the judgment to the Korea Development Bank," adding, "However, since Financial Services Commission Chairman Eun Sung-soo mentioned that there are various support methods such as the bond stabilization fund and Primary Collateralized Bond Obligations (P-CBO) besides the GISF, the possibility of support remains open."
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