Gov’t doubles down on support for businesses

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Gov’t doubles down on support for businesses

The official response to the coronavirus threat is about to get bigger.

Finance Minister Hong Nam-ki on Thursday said the government is currently working on export support measures as it endeavors to keep the economy growing as the outbreak creates bottlenecks and weakens consumer sentiment.

“We could announce [the measures] later this month or sometime next week,” Hong said.

He said he is worried the impact of the coronavirus could be greater than the damage caused five years ago by the spread of Middle East respiratory syndrome (MERS) due to deeper fear over the current outbreak.

“The fear seems more excessive when compared to five years ago during the MERS crisis,” the finance minister said. “While there were 38 casualties during MERS, there have been no deaths this time or even patients in a severe state.”

He re-emphasized the tight quarantine efforts and advised the public not to be overcome by fear.

“It is important to consume normally and undertake economic activities without being in fear,” Hong said.

“I believe our task is to minimize the economic impact, swiftly support companies that have been affected and protect and rejuvenate the economic recovery momentum seen from the beginning of the year,” Hong said.

The Financial Services Commission (FSC) on Thursday said more than 30 billion won ($25 million) of support has been provided to small- and medium-sized enterprises (SMEs) and small private merchants affected by the coronavirus in the three days since the government announced plans to help businesses.

The support included 1.8 billion won of loans provided by state-owned financial institutions. It also included 2.5 billion won of loan maturity extensions and 3.6 billion won in loan guarantees.

In addition, loan guarantees were extended for 11.8 billion won worth of existing loans.

Private financial institutions also provided support including 10.6 billion won of fresh loans and maturity extensions.

Credit card issuers offered 2.5 billion won worth of support, including discounts on commission charges and late payment fees.

“Considering the large trade with China, a slowdown in the Chinese economy could have a negative impact on exports and production,” said Sohn Byung-doo, FSC vice chairman. “If the situation prolongs, it could affect consumer spending that would increase the difficulties that service industries and small businesses face.”

He said the government will continue to monitor the situation closely while acting swiftly to stabilize the market.

“We will continue to expand the size of the support as well as the targets of support,” Sohn said.

The virus scare has been affecting the businesses of major conglomerates, such as Hyundai Motor, which had to stop production several times due to the shortage of parts imported from China.

A survey found that the virus impact on SMEs is severe.

According to the survey by the Korea Federation of SMEs earlier this week, one-third of SMEs said they had already experienced outbreak-related damage.

According to the survey was of 250 companies, 31 percent of the SME manufacturers said their businesses were affected, as did 38 percent of the service businesses.

More than half, or 56.4 percent, of the manufacturers said they had trouble with supplies of raw materials, while 43.6 percent said they struggled with parts supplies.

For service businesses, 76.6 percent said they were experiencing a drop in earnings as more people are staying at home.

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