Korean exporters eligible for W23 tril. in benefits offered by private sector and gov't

Financial Services Commission (FSC) Chairman Kim Joo-hyun, center, speaks during a meeting attended by executives of eight banks and policy financial institutions in central Seoul, Wednesday. Courtesy of FSC

Support aimed at boosting competitiveness of export companies

By Anna J. Park

Korean exporters will be able to save money spent on transaction fees, while enjoying substantial financial benefits as they venture into new markets overseas. Such benefits, which are part of W23 trillion ($17 billion) in support offered by the government as well as state-owned and private banks, include lowered bank interest rates available for overseas joint venture businesses by both large companies and their partners.

These are some of the benefits to be available to exporters, as the government and major commercial banks have come up with a set of joint measures to support the local export industry.

The Financial Services Commission (FSC), the country's top financial regulator, announced the series of measures, Wednesday. The move is a follow-up measure to an export strategy council meeting, presided over by President Yoon Suk Yeol, held in February this year, aiming to strengthen the global competitiveness of Korean exporters.

The FSC has continuously engaged in dialogue with export companies and related institutions to come up with comprehensive support measures.

”From the perspective of industrial development, companies need to compete in the global market in order to achieve innovation and enhance competitiveness. The external situation facing Korean exports is not easy, with Korea's export volume declining steadily since last October,” FSC Chairman Kim Joo-hyun said during a meeting with major bank executives and financial policy officials in central Seoul, Wednesday.

To counter the situation, benefits amounting to 4.1 trillion won plus more will be offered for companies that are exploring new export markets, while 18.6 trillion won will be provided to strengthen the competitiveness of Korea's strategic export industries. Specifically, a total of 15 trillion won will be provided for the next five years to new growth engine industries through innovative funds jointly financed by the government, state-run Korea Development Bank (KDB), as well as private banks.

The five major commercial banks ― KB Kookmin, Shinhan, Hana, Woori and NH NongHyup ― have also decided to supply export-exclusive products totaling 5.4 trillion won, providing preferential interest rates for exporters. They have also committed to significantly reducing local exporters' financial burdens. The banks offer preferential interest rates of up to 1.5 percentage points and guarantee fees of up to 0.8 percentage points, available to existing exporters, as well as potential export companies. The financial authorities expect export companies will be able to save approximately 50 billion won annually in interest and guarantee fees through these preferential bank products.

In particular, mid-sized companies, which have been in a relative blind spot in terms of government policies, will receive loan benefits and R&D funding to maintain and enhance their global competitiveness.

“Mid-sized companies have experienced relative inadequacy in support, as they fall between large companies and small-sized enterprises. The measures aim to expand guarantees and loans in line with their appropriate competence and scale, providing sufficient funding for facility and R&D investments necessary to enhance their export competitiveness,” the FSC chairman explained, emphasizing that exporters make up the core of the Korean economy by facilitating economic recovery, the stable management of foreign exchange markets and quality job creation through growth.

Outbound shipments accounted for 48.3 percent of Korea's GDP in 2022, showing the Korean economy's high level of reliance on export competitiveness. On average, 30.4 percent of OECD countries' economies depend on exports.