[Second Half Economic Policy] "Economic Recovery Through Exports"... 'Record High' 184 Trillion Trade Finance Supplied

2023 Second Half Economic Policy Direction
'Full Support for Export Rebound and Achieving 35 Billion Dollar Overseas Orders'

The government plans to supply the largest-ever trade finance to swiftly rebound exports and strengthen customs and financial support for export companies. Additionally, to achieve $35 billion in overseas orders, it will significantly expand international cooperation and financial support, including high-level sales diplomacy.

On the 4th, the government jointly announced the '2023 Second Half Economic Policy Direction' with related ministries, containing these details.

Bang Gi-seon, First Vice Minister of the Ministry of Economy and Finance, said, "Due to the recovery in the IT industry and other factors, the performance of semiconductors, which had led the export slump, is expected to improve as we move into the second half. We will support the export rebound in the second half through high-level sales diplomacy, supplying trade finance worth 184 trillion won, and achieving $35 billion in orders."

(Photo) [Image source=Yonhap News]

Full Support for Export Rebound with the Largest-Ever Trade Finance

First, the government will strengthen and improve support centered on small and medium-sized enterprises (SMEs) and export diversification companies. During the second half of the year, trade finance will be supplied at the largest scale ever (184 trillion won), and financial support will be enhanced for SMEs and companies successful in export diversification. The Small and Medium Business Corporation's export SME loan support, currently at 357 billion won, will be increased by 150 billion won to 507 billion won, and the interest differential compensation benefit for SMEs struggling with high interest rates will be expanded from 2 percentage points to 3 percentage points. Additionally, the Korea Technology Finance Corporation will reduce guarantee fees and increase guarantee ratios, and the Export-Import Bank of Korea will offer preferential loan interest rates.

Customs-related tax support will also be increased for excellent export SMEs, including extensions of tax payment deadlines, allowance of installment payments, and exemption from collateral provision. The number of customs investigation deferral targets, currently 13 including innovative SMEs, will be expanded to 19 by adding job-creating companies and excellent export SMEs. Next year, support limits will be raised and self-payment ratios eased for export diversification SMEs.

The government plans to continuously prepare support measures through presidential export strategy meetings and inter-ministerial export investment countermeasure meetings, focusing on new export growth engines such as smart farms, defense, energy, and export infrastructure like trade finance. It will also promote the establishment of a demand-centered support system, including the one-stop visiting export 119 service and a government-wide integrated overseas exhibition application platform, and dispatch trade delegations to 10 promising export countries selected through market research.

Strengthening Overseas Order System... Raising KEXIM’s Statutory Capital Limit to 15 Trillion Won

The government also unveiled a strategy to achieve $35 billion in overseas orders this year. First, to ensure that large overseas orders lead to actual exports, it will improve the order support system, including finance and tax measures. To prepare for risk-sharing with low-credit countries and the need for large-scale support, it will support the Export-Import Bank of Korea’s (KEXIM) special account investment for infrastructure projects in countries with a sovereign credit rating of B+ or lower and raise the statutory capital limit, currently 15 trillion won, to expand financial support.

Furthermore, it will promote expanded tax benefits for loans to overseas subsidiaries of domestic construction companies and support smooth trading of loan claims acquired by policy financial institutions as lead arrangers.

International cooperation will also be strengthened. Based on high-level sales diplomacy and strategic official development assistance (ODA), the government will support large-scale orders and contracts. It will push for approval of high-value Economic Development Cooperation Fund (EDCF) projects such as the Bangladesh Karnaphuli Bridge construction ($780 million) and Kenya Konza Digital Media City ($130 million), and pursue new agreements and increases with India, Rwanda, and C?te d'Ivoire.

Efforts to support large orders in infrastructure, defense, and nuclear power will be intensified across government agencies. While continuing consultations with promising nuclear power order countries, support will be provided for joint entry of nuclear public enterprises and equipment cooperation companies, as well as strengthening export capabilities of nuclear SMEs. Additionally, aiming to become one of the top four defense export countries by 2027, the government will enhance promotion and cooperation of weapon systems at defense exhibitions and high-level meetings, and continue discussions on joint investment in large projects through overseas infrastructure financial investment consultative bodies and dispatch the One Team Korea order support group.