Gov’t boosts loan support for tech firms
The financial support is a 5 trillion won increase from last year, the Financial Services Commission said Tuesday. The loans will be provided by state-run banks including the Korea Development Bank, Industrial Bank of Korea and Export-Import Bank of Korea.
Of the 85 trillion won, 20 trillion won will support the development of advanced technology such as artificial intelligence, big data and the so-called Internet of Things.
The Financial Services Commission designated nine categories for “new growth engine” sectors. They include advanced manufacturing and automation; new chemicals and materials; energy; environment and sustainable development; health care; information and communications technology; electronics; sensors; and cultural content.
The regulator also listed specific fields including 3-D printing, carbon nanotubes and biosimilars.
When evaluating tech companies for loans, the Financial Services Commission will adopt a new standard that combines an assessment of a company’s technology and financial conditions.
“If we combine the evaluation of technology and the company’s ability to pay back money in the initial screening process, companies with promising technology can get a better opportunity to borrow money,” said Doh Kyu-sang, head of the financial policy bureau at the Financial Services Commission.
The Financial Services Commission will test the new standard in 2019 and put it into effect in 2020.
Doh added that a set of other new measures will be introduced this year. Among them is a system aimed at streamlining companies’ management turnaround. The measure, dubbed the “Pre-Packaged Plan,” will allow creditors to issue a preliminary restructuring plan earlier to the bankruptcy court so that the insolvent company and creditors can enter negotiations earlier than before.
“Recently, companies in the different fields have entered restructuring processes,” Doh said, “And we thought that a new, more efficient model is required.”
For cost-conscious investors, the Financial Services Commission will embrace performance-based fees to a small crop of mutual funds starting in March, the first of its kind in Korea’s financial sector.
The fund products have mostly been based on a flat fee, but the new mutual fund will come with commission fees of approximately half the price, though the fees can go up according to the returns.
BY PARK EUN-JEE [firstname.lastname@example.org]