Half of Export Companies Say "Please Lower Interest Rates"... 70% Do Not Feel the Impact of Policy Finance

Martial Arts, Announcement of the Results of the '2nd Trade Industry Financing and Policy Finance Survey'

Recent survey results show that companies are not feeling the impact of the successive policy finance expansion measures.

The Korea International Trade Association (KITA) announced the results of the "2nd Trade Industry Financing and Policy Finance Survey" conducted on 577 export companies on the 6th.

This survey was conducted following the "1st Financial Difficulties Survey" carried out at the end of last year. Most of the respondents were small and medium-sized enterprises (95%), with 25% of responses from CEOs and 75% from operational staff.

59.8% of respondents answered that their overall financial situation has "significantly or somewhat worsened" compared to the previous year. The causes of financial deterioration (multiple responses allowed) were cited as interest rate hikes (55.3%), raw material price increases (53.9%), and sluggish sales (44.7%). By position, the percentage of CEOs reporting "worsened financial conditions" (73.5%) significantly exceeded the overall average (59.8%), revealing that executives directly managing companies experience greater financial difficulties than operational staff.

The proportion of companies reporting that interest expenses exceed operating profits was 25.3%, an increase of 10.2 percentage points from the previous survey (15.1%), indicating that the ongoing high domestic and international interest rate environment is deteriorating corporate financial soundness.

[Provided by Korea International Trade Association]

Regarding the perception of the recent successive policy finance expansion announcements, 49.4% of respondents answered "I don't know well," and 21.0% responded "I do not feel it at all."

The main difficulties in applying for policy finance were cited as ▲high thresholds for support conditions ▲difficulty in obtaining information ▲complex application procedures. Companies most frequently requested "interest burden relief (49.6%)" as a necessary measure beyond policy finance support, followed by loan limit expansion (34.8%) and maturity repayment deferral (26.9%).

Additionally, regarding policy finance systems, suggestions included ▲expansion of short-term loan products ▲allowing duplicate loan guarantee applications at the Korea Credit Guarantee Fund and the Korea Technology Finance Corporation ▲establishment of an integrated portal for policy finance information provision ▲strengthening promotion and guidance ▲computerization of document submission procedures.

Jang Manki, Vice Chairman of KITA, stated, "Amid increasing financial market instability due to major countries' interest rate hikes and bank failures, we confirmed that financial difficulties for export companies have intensified compared to the end of last year," adding, "Continuous monitoring is necessary to minimize damage to export companies as the external financial environment changes moment by moment."

He continued, "It is fortunate that policy proposals submitted by the association to financial authorities since the beginning of the year have been reflected, resulting in successive financial support announcements," and added, "However, since export companies are having difficulty feeling these effects, it is necessary to resolve information asymmetry through related promotion and information provision so that more companies can benefit."

Meanwhile, KITA expressed its timely and active welcome for the recent policy finance expansion and improvement measures for export companies announced consecutively by the Ministry of SMEs and Startups and the Small and Medium Business Corporation.

KITA stated, "We deeply agree with the Ministry of SMEs and Startups' goal of making small and medium enterprises the main players in Korea's exports," and assessed, "Since the announced improvement measures address difficulties that small and medium enterprises have continuously raised, it is expected that the industry will feel significant effects."