Stimulus plan to offset weak yen announcedBecause of the weak Japanese yen, the government said yesterday it would inject a total of 4.5 trillion won ($4.18 billion) into the economy by the end of the year to boost trade with Korea’s neighboring country.
The economic stimulus budget includes 1 trillion won to boost exports to Japan and 3.5 trillion won to encourage local manufacturers to import cheap Japanese parts, machinery and technology.
The Ministry of Strategy and Finance said the 4.5 trillion won is part of the stimulus package worth 31 trillion won. The new fund aims to expand exports to Japan and turn the weak yen crisis into an opportunity to strengthen local technological capabilities.
According to the ministry, the main beneficiaries of the new budget will be the 4,000 local small and midsize companies that export more than 20 percent of their products to Japan.
Of the budget, 100 billion won will be made available to companies in the form of low-interest loans.
The lowered interest rate on loans will apply to companies that export at least 10 percent of their goods to Japan. It previously only applied to companies that exported 20 percent of their goods to the country.
The Finance Ministry said companies that export at least 10 percent of their goods to Japan will also be exempt from paying guarantee fees. A law that waived the fees expired in June, but the ministry decided to implement it again next year.
In addition, the state-run Korea Trade Insurance Corporation will give a 50 percent monthly discount on currency protection insurance plans from the current 20 percent.
The Finance Ministry said it will spend 3.5 trillion won to encourage local manufacturers to purchase Japanese products that have become cheap due to the weak yen.
The fund includes a 30 percent discount on tariffs for small and midsize manufacturers that import parts and machinery from Japan to be used at manufacturing facilities in Korea from now through the end of 2015.
The government will also prepare a 300 billion won fund to help small and midsize material manufacturers acquire Japanese companies with machinery technology.
A report by the Korea International Trade Association early this month said Japanese companies had decided to maintain heavy spending on R&D and to update their production facilities despite the weak currency.
The report also warned that Japanese companies have started dropping prices, threatening Korea’s exports.
BY KIM JI-YOON [email@example.com]