Korea companies to get government support for exports

President Yoon Suk-yeol attends an export strategy meeting held at the Korea Trade-Investment Promotion Agency in Yangjae, southern Seoul, on Tuesday. [JOINT PRESS CORPS]

Korean companies will receive significant support from the government as the country seeks to boost exports.

"We can’t just tell the private companies that they are on their own,” President Yoon Suk-yeol said on Tuesday during his first export strategy meeting held at the Korea Trade-Investment Promotion Agency headquarters in Yangjae, southern Seoul.

Southeast Asia, especially Indonesia, is one of the key targets as the region is rich in natural resources needed by Korea.

The meeting was attended meeting by Finance Minister Choo Kyung-ho, Trade, Industry, Energy Minister Lee Chang-yang and Land, Infrastructure and Transport Minister Won Hee-ryong. Representatives from Samsung C&T, Hyundai Rotem, Doosan Enerbility, Hyundai E&C and S-Oil also attended.

During the meeting, Yoon noted that government-to-government negotiation is especially important in countries where the government has a high degree of control over the economy. He raised the need for aggressive government support to work with governments of the other countries in improving regulations.

Korea is still pushing for a three-year grace period on the U.S. Inflation Reduction Act, which prohibits subsidies for electric vehicles built outside the United States. The three-year grace period will give Hyundai Motor time to complete an EV production plant in Georgia.

During the meeting, Yoon stressed the need to grab hold of opportunities in the Middle East, especially in infrastructure development, including the NEOM city project. He said the Middle East is in need of Korea’s technology and experience in the major infrastructure projects.

“All departments have to provide strong support to the private sector so that they can actually realize exports and other opportunities in various areas through summit diplomacy,” Yoon said.

Construction orders from the Middle East have been growing fast in recent years. According to the Korean government, these orders in 2018 were $7 billion and last year grew to nearly $7.7 billion.

In the first 10 months of this year, orders totaled $5 billion.

Yoon said Middle East and European countries have been showing interest in Korea’s nuclear energy and defense citing the recent global energy security crisis.

“There have been many European and Middle East countries that wanted to discuss such issues with our government officials,” Yoon said. “There are calls for cooperation on high tech industries.”

This year, Korean companies won the contract to build a turbine island at the El-Dabaa nuclear plant in Egypt, and last month, Korea was promised business related to a reactor contract in Poland.

Korea is also bidding for nuclear projects in the Czech Republic and Saudi Arabia.

Asean was another key target mentioned during the meeting.

Asean is Korea’s second largest export destination after China. In 2021, China took 23.1 percent of Korea’s exports, Asean 18.6 percent and the U.S. 15.8 percent.

Korean companies have recently been increasing investment in Asean countries. Between 2018 and 2021, Korean companies invested nearly $9 billion in Asean countries, while investment in China was $5.5 billion.

Korean companies are shutting operations in China are relocating to Asean markets.

Samsung SDI last year shut its battery production plant in China and Samsung Electronics opened an R&D center in Hanoi, Vietnam in May last year.

LG Electronics closed its auto parts plant in China two years ago and said in July it is relocating its R&D center in China to Indonesia.

Recently Korea’s exports have been struggling and imports continue to rise. Korea has reported a trade deficit for seven consecutive months. In the first 20 days of this month, exports dropped 16.7 percent year-on-year.

“As everyone knows, our economy has the highest trade dependency in the world, and almost all industries are directly or indirectly connected to exports,” Yoon said. “Exports have been the source of jobs.”

The president stressed that unlike in the past when Korea’s exports were labor focused, the key export goods today have to be technology based.

“The Korean economy today was made through exports,” Yoon said. “Especially at a time when the world faces a complex crisis, we need to move ahead by boosting our exports.”

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]