Seoul maximises financial support for firms threatened by Japan’s export curbs

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SEOUL (The Korea Herald/ANN) — Seeking to minimise the impact from the aggravating South Korea-Japan economic relations, financial policymakers have made actions over the weekend to allocate a maximum of 6 trillion won ($4.98 billion) to financially support local firms and secure liquidity.

In a meeting presided over by the Financial Services Commission on Saturday, financial authorities agreed to launch a support program for companies threatened by Tokyo’s latest decision to place restrictions on exports of three key materials used in semiconductors and displays.

The new program targets local companies that imported the three key materials used in semiconductors and displays since January 2018, as well as firms that are deemed to have received damage from Japan’s export curbs are eligible for support as well.

Out of the 3.8 trillion-won budget, the state-run Korea Trade Insurance Corporation and Export-Import Bank of Korea will provide 2 trillion won to help companies diversify their sources of import and consequently reduce reliance on Japan-produced materials.

While the program’s main beneficiaries are small and medium-sized enterprises, conglomerates are eligible for support to diversify import sources.

The KTIC, also known as K-sure, will offer special terms and conditions on import insurance, while Exim Bank plans to raise the loan limit for firms seeking alternative import sources from the current 80 percent to 90 percent.

The Exim Bank will also lower its loan interest rate for both large firms and SMEs.

The government also plans to use its existing budgets previously allocated for stability in corporate management.

It said it will place a cap of 2.9 trillion won on such budgets.

State-run institutions will also extend the debt maturity of affected companies by a year.

Besides operating financial programs, the government will launch a separate program to support facilities investment, research and development and mergers and acquisition for firms to bolster sectors related to materials, parts and equipment, while boosting competitiveness.

It will allocate money from state-run funds and institutions for firms importing products excluded from its whitelist and those seeking to enter the materials, parts and equipment sector.

Commercial banks including the big four — Woori, KEB Hana, Shinhan and KB Kookmin — joined in the government’s moves to limit the impact of the export restrictions.

Their financial support is focused on postponing the firms’ loan repayments and offering special conditions for loans and interest rates.

They plan to establish a task force for firms struggling with financial issues stemming from the Seoul-Tokyo trade row.

“To overcome imminent obstacles, we will use our operating fund as much as possible and bankroll a sufficient amount of capital needed for research and development and mergers and acquisition to boost competitiveness of the materials and parts sector,” FSC Chairman Choi Jong-ku said Saturday.

By Jung Min-kyung