Gov’t unveils record $190bn financial support to boost exports

[Courtesy of Ministry of Trade, Industry and Energy]

The South Korean government plans to expand financial support for exporting companies to a record high of 255 trillion won ($190.33 billion) to achieve this year’s export target of $700 billion.

Under measures unveiled during a government-private joint meeting on Monday chaired by the Minister of Trade, Industry and Energy Ahn Duk-geun, the government plans to allocate 255 trillion won in trade insurance for 2024, up by 10 trillion won from 2023.

The size of trade insurance has increased by about 100 trillion won in five years from 156 trillion won in 2019.

“Trade insurance is crucial for Korean exporters, covering 30 percent of total exports,” said a ministry official. “Considering the characteristics of trade transactions by industry, we have decided to present specific supply targets for each industry for the first time.”

The government will provide 50 trillion won in trade insurance to the information technology (IT) sector, which includes semiconductors, displays, mobile phones, and home appliances. The Korea Trade Insurance Corp. (K-Sure) will provide loan guarantees for semiconductor companies such as Samsung Electronics Co. and SK hynix Inc. when they purchase extreme ultraviolet (EUV) lithography equipment from ASML Holding N.V. in the Netherlands, which costs hundreds of billions of won per unit.

The automotive and secondary battery sectors will also be supported with 33 trillion won in trade insurance.

For parts companies, which are mainly small and medium-sized enterprises, the government will focus on guaranteeing against non-receipt of export payments.

Support for secondary battery companies will be centered on loan guarantees related to the establishment or expansion of overseas factories, especially in the United States, as demanded by the sector.

Export insurance for five promising consumer goods, such as K-food and K-beauty, will increase to 18 trillion won in 2024 from 15.2 trillion won a year ago.

The government also plans to provide 26 trillion won in support for overseas mega-projects such as defense industry exports and nuclear power plants.

The government will provide 7 trillion won worth of tailored support for the defense sector, including guarantees for advance payments to be received from ordering countries,

“We plan to issue K-Sure insurance certificates for production loans to defense contractors even if they do not have an export track record, based solely on purchase confirmation from ordering companies,” said an industry ministry official.

K-Sure also plans to provide financial packages and special guarantees worth 4 trillion won in 2024 for overseas nuclear power plant orders.

In particular, the government introduced special guarantees for small and medium-sized enterprises delivering nuclear power plant components for 2024.

“Now is the time for the public and private sectors to work together as one team to boost our exports so that the three engines of our economy - consumption, investment, and exports - can be fully revived to advance our economy,” Ahn said.