Hankyungyeop Proposes Support Measures for Petrochemical Industry Including 'Electricity Fee Reduction'

Proposal Includes Exception to Merger Prohibition
and Other Measures

The Korea Economic Association announced on the 24th that it has submitted the 'Urgent Tasks to Overcome the Petrochemical Industry Crisis' to the Ministry of Trade, Industry and Energy. The association emphasized, "Following the government's announcement of support measures for the petrochemical industry at the end of last year, a concrete implementation plan is scheduled to be announced in the first half of this year," adding, "The tasks derived this time must be reflected in the government's additional support measures."

The support measures proposed by the Korea Economic Association consist of 13 items across three areas: 'cost burden and tax relief,' 'improvement of business environment,' and 'support for high value-added and low-carbon transition.'

On the 12th, employees of tenant companies are moving at the Korea Economic Association in Yeouido, Seoul. Photo by Jin-Hyung Kang aymsdream@

First, the association believes that support for regions proactively responding to industrial crises should be significantly increased. It stated, "In the petrochemical industry, electricity costs account for about 3.2% of major production expenses, raising concerns about a decline in global price competitiveness due to electricity rate hikes," and requested, "Please reduce industrial electricity rates using government funds and reserves."

They also proposed deferring taxation on capital gains from the sale of related assets due to business restructuring until the business is closed.

Regarding the improvement of the business environment, they emphasized the need to create an environment for rapid business restructuring.

The association suggested establishing an exception clause, stating, "Corporate mergers are prohibited under the Fair Trade Act when the combined market share becomes the highest in the relevant field. There is a high possibility that corporate mergers will be prohibited if domestic petrochemical companies consolidate similar business sites."

Concerning high value-added and low-carbon transition, they proposed upgrading pollution prevention and resource circulation technologies, biochemical technologies, and carbon capture, utilization, and storage (CCUS) technologies to national strategic technologies.

Additionally, they added that the government should secure common land to build pilot and demonstration complex sites and consider jointly utilizing auxiliary production facilities such as wastewater treatment.

Lee Sang-ho, head of the Economic and Industrial Headquarters at the Korea Economic Association, said, "Business restructuring to ensure the survival and competitiveness of the petrochemical industry is urgent," and added, "Support must be significantly strengthened, and the right to request reconsideration should be exercised regarding the amendment to the Commercial Act, which could cause major disruptions to restructuring such as mergers and acquisitions."