Government Announces Financial Support Plan to Address Trade Risks
Joint Meeting of Economic Ministers and Ministers for Industrial Competitiveness
In response to the global trade risks triggered by the United States' imposition of tariffs, the government will secure over 28 trillion won in funding?including through an extra budget?to support domestic companies.
The Ministry of Economy and Finance, Financial Services Commission, Ministry of Trade, Industry and Energy, and Ministry of SMEs and Startups held a joint meeting of economic ministers and ministers responsible for industrial competitiveness at the Government Complex Seoul on May 21, where they announced the "Financial Support Plan to Respond to Trade Risks."
The government plans to raise an additional 28.6 trillion won through the extra budget and other means, to specify and promptly supply additional financial support measures to address trade risks.
First, the government will provide 16.3 trillion won in emergency crisis relief funds to companies affected by tariffs. In this regard, since April 16, the Export-Import Bank of Korea has been continuously offering low-interest loans and consulting services to small and medium-sized enterprises (SMEs) and mid-sized companies impacted by tariffs. The Korea Development Bank and the Korea SMEs and Startups Agency are also supporting SMEs and mid-sized companies with low-interest operating funds and emergency funds for trade risk response.
The Korea Credit Guarantee Fund and the Korea Technology Finance Corporation will introduce special guarantees for crisis recovery, applying preferential guarantee ratios (up to 95%) and guarantee fee rates (up to 0.5 percentage points) to companies in industries affected by tariffs, regions responding to industrial crises, and areas impacted by disasters. The Korea Trade Insurance Corporation will expand special support and export credit guarantees for export companies facing difficulties in obtaining standard guarantees due to deteriorating financial conditions.
To promote market diversification, 7.4 trillion won in loans and guarantees will be provided to companies entering new export markets. The Export-Import Bank of Korea has established new financial support for export diversification, and new market entry funds will be offered as low-interest loans. SMEs and mid-sized companies that expand overseas together with large corporations under mutual cooperation agreements with the Export-Import Bank of Korea, or that supply goods to such overseas companies, will be eligible for preferential interest rates. Additional funding will also be supplied for defense export guarantees and shipbuilder advance payment refund guarantees (RG).
The government will also supply 4.9 trillion won to support advanced industry facility investments and the restructuring of key industries to strengthen industrial competitiveness. Through the Korea Development Bank, 3.4 trillion won will be allocated to support semiconductor facility investments, and an additional 1 trillion won will be provided as low-interest loans for advanced industry facility investments outside the semiconductor sector.
A government official stated, "As U.S. tariffs and intensifying competition in advanced industries are increasing difficulties for companies, we will hold industry briefings and joint promotions with relevant agencies to ensure swift implementation, and, if necessary, support liability exemptions for financial institutions to facilitate active funding supply."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
