End of Iran war, stabilization of fuel prices prerequisite for termination of price cap system: minister

Industry Minister Kim Jung-kwan speaks to reporters on the fuel price cap system and other pending issues at the government complex in the central city of Sejong, Monday. Courtesy of Ministry of Trade, Industry and Resources

The end of the war between the United States and Iran, and the stabilization of fuel prices are preconditions for the possible lifting of price ceilings on domestic fuel products, Industry Minister Kim Jung-kwan said Monday.

Three conditions should be met for the government to terminate the price cap system: the end of the Iran conflict, the normalization of crude delivery with the reopening of the Strait of Hormuz and consensus on ongoing talks on how to improve the relationship between oil refineries and gas stations, Kim said during a press briefing on pending economy-related issues.

Kim made the remarks in response to questions that the government is reviewing whether it should keep the system in place after Prime Minister Kim Min-seok said last week that Seoul will decide whether to maintain the price ceilings after careful review.

Kim said the government has yet to discuss the termination of the system, noting it is too early to determine whether the U.S. and Iran will actually end their war, and whether the impact of the conflict will have a long-term impact on international fuel prices.

"I think the system has created an appropriate balance (in the fuel market) both from the perspective of gas stations and consumers," he said, noting that gasoline prices here have only climbed around 10 percent from pre-war levels, while prices in the U.S. jumped 30-40 percent.

The Ministry of Trade, Industry and Resources froze price ceilings on gasoline, diesel and kerosene for the second consecutive time Thursday at 1,934 won ($1.30), 1,923 won and 1,530 won per liter, respectively.

The government sets maximum prices for fuel products every two weeks under the temporary price cap system introduced in mid-March to stabilize domestic fuel prices.

Regarding the standoff between the management and the labor union of Samsung Electronics, the minister said he hopes the two sides will reach a "wise" and "mature" conclusion, noting that the case is not merely an issue concerning the company and its employees, but an issue related to the future of the industry.

Unionized workers of Samsung Electronics hold a rally at the company's manufacturing campus in Pyeongtaek, Gyeonggi Province, Thursday. Korea Times photo by Shim Hyun-chul

Unionized workers of Samsung Electronics have been threatening to launch a massive strike, demanding a sharp hike in performance-based bonuses in line with the company's strong chip profits. This has fueled concerns that such action could disrupt Samsung's semiconductor production and further deal a blow to one of Korea's most important industries.

"The question is whether we can view Samsung's performance as an outcome achieved only by the company's management, engineers and other workers," Kim said, noting that many other factors should be considered as well, including the conglomerate's suppliers and subcontractors, as well as some 4 million shareholders of the company.

"We also need to remember that the semiconductor industry can only survive with continued massive investment ... and once it loses its competitiveness, it is difficult to recover, and in most cases, companies never do," he stressed.

On continuing controversy over Coupang, a U.S.-listed e-commerce firm accused of lobbying Washington to pressure the Seoul government in relation to a probe into a massive data leak incident involving the company, Kim said the government is working to manage the issue so it does not affect trade and security issues between Korea and the U.S.

"The best we can do is continuing to deliver our government's stance and sincerity on this matter to the U.S. side as the U.S. appears to view the issue as a minor data leakage incident, but we consider it to be a serious case," he explained.

Coupang has faced scrutiny since authorities disclosed in November that a massive data leak had affected 33.7 million customers in Korea, which accounts for about 80 percent of the country's total adult population.

Last week, U.S. lobbying reports showed that the retail giant has spent more than $1 million on lobbying in the U.S., including efforts involving the White House and Congress, since its data leak scandal, raising speculations the activities were aimed at pressuring the Korean government. The company has denied all such allegations.