Chief Policy Officer Kim Yongbeom: "Socializing Losses in the Petrochemical Industry Is Unacceptable"

"Profitable in the Past, but Losses Cannot Be Shifted to Creditors and Investors"

Kim Yongbeom, Chief Policy Officer at the Presidential Office, emphasized that the petrochemical industry must first present and implement its own strong self-rescue measures in relation to the government-led restructuring of the sector. The government, during a meeting on strengthening industrial competitiveness chaired by Deputy Prime Minister for Economic Affairs Koo Yooncheol, decided to pursue a plan to reduce the production capacity of naphtha cracking centers (NCC) by up to 25%.

Yonhap News

On August 20, during a press briefing at the Yongsan Presidential Office, Kim stated, "Just two to three years ago, this was a highly profitable sector," adding, "It is unacceptable to privatize profits while socializing losses."

Kim assessed that the petrochemical industry has sufficient capacity to devise its own self-rescue measures. He said, "The industry has accumulated significant profits, and if it wants to survive, it must do everything possible within its own means. It is absolutely unacceptable to keep the profits earned over the past few years while expecting bondholders or investors to handle the bonds or loans already issued after the situation worsens."

He further stressed that restructuring should not occur through external intervention. Kim explained, "If the industry acts selfishly and mid-sized companies face difficulties, the entire corporate bond market will be affected. The government’s restructuring plan was developed through simulations to manage the situation without causing market shocks." He added, "Restructuring must be carried out voluntarily by the end of the year. This is important not only for the region but also for the nation as a whole. In the case of Yeosu, the situation is already serious."

Regarding the current state of the petrochemical industry, Kim noted that it is not the worst-case scenario. He said, "According to BCG Consulting, there are clear guidelines on how much needs to be reduced. There is ample time, and it is not as if a third of the facilities need to be shut down." He continued, "We will allow time until the end of the year and conduct implementation checks led by the Ministry of Industry. We hope that voluntary restructuring will proceed so that the Financial Services Commission does not need to intervene."