Gov't to provide $293 billion in trade financing to revitalize exports

The Korea Times

The Korea Times

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Tue, September 26, 2023 | 11:30

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Gov't to provide $293 billion in trade financing to revitalize exports

Posted : 2023-02-03 16:27

Updated : 2023-02-05 13:26

Minister of Trade, Industry and Energy Lee Chang-yang speaks during a ministerial-level meeting at the Seoul Government Complex in Gwanghwamun, Friday. Yonhap

By Lee Kyung-min

The government will provide a total of 360 trillion won ($293 billion) in trade financing and assistance with obtaining certifications for local exporters abroad as part of its efforts to boost the nation's faltering exports amid deepening global economic downturn, according to trade ministry officials Friday.

The latest measure seeks to anchor 100 trillion won investment planned by the country's top 10 manufacturers, a much-needed yet extremely risky growth strategy in times of sustained uncertainties and unfavorable macroeconomic conditions.

The slowdown in exports and the widening trade deficit were led primarily by declining unit prices of semiconductors and increased product stockpiles.

The weakening global market demand for Korean-produced chips will not recover ― not at least in the first half of this year. Easing COVID-19 quarantine restrictions in China ― the largest importer of semiconductors ― will need a few months to register an increase in exports significant enough to offset soaring energy imports.

Semiconductors account for about a fifth of Korea's total outbound shipments.

The Ministry of Trade, Industry and Energy said two-thirds of this year's budget to bolster exports will be front-loaded before July, to better weather what is highly expected to be a difficult six months of economic conditions.

The 360 trillion won in trade financing, the largest amount ever allocated, will help strengthen local manufacturers to obtain overseas certification, the prerequisite to gaining recognition and expanding their presence in overseas markets.

Also to be provided is 81 trillion won in financing for manufacturing facility investment and research and development (R&D). Efforts will be continued to attract at least $30 billion in foreign direct investment.

The government will closely cooperate with the National Assembly to ensure timely legislation of expanded investment tax credits, reintroduced 12 years after it was last effective. Also needing a parliamentary discussion is the issue of providing greater tax credits for developers of technologies considered vital to promoting national security and future growth.

Minister of Trade, Industry and Energy Lee Chang-yang said the government will spur facility and R&D investment to fortify the capabilities of local exporters.

"The economy-related ministries will mobilize efforts to help bring tangible results of government policy support in the first half of the year," he said.

"Our efforts will help bring a swift recovery in the latter half, a period of eased global economic uncertainties. The semiconductor industry is expected to see a turnaround by then."

Korea registered an all-time high trade deficit of $12.69 billion in January. The 10th consecutive month of deficits was brought on by surging energy imports and plunging exports.

lkm@koreatimes.co.kr