Korea to support chips, displays and batteries to boost exports

Finance Minister Choo Kyung-ho speaks at a ministerial meeting held at the government complex in central Seoul on Thursday. [YONHAP]

Korea will invest at least $3.5 billion into chips, displays and batteries over the next five years with the goal of achieving supremacy in the markets.

The Ministry of Economy and Finance said Thursday the government will invest 4.5 trillion won ($3.5 billion) and encourage private corporations to invest 150 trillion won into the industries through support measures, including tax benefits, and forming strategic cooperation with countries with advanced technologies in the fields.

A ministerial meeting, attended by Finance Minister Choo Kyung-ho and Minister of Science and ICT Lee Jong-ho, was held to discuss measures to boost the economy and exports, which have struggled in recent months due to weak chip demand and global economic slowdown.

Exports last month fell 13.6 percent on year, and have been on the decline since October. Korea suffered trade deficits for 13 straight months through March.

“Exports exceeded $55 billion in March, the first time in six months, and daily average exports also improved,” said Choo.

He added exports of cars and reusable batteries are improving, but not chips, adding that the “impacts of China’s reopening haven’t yet been materialized.”

Chip exports in March fell 34.5 percent and exports to China were down 33.4 percent.

“The government has been largely expanding investment in science technologies,” Lee said. “The three fields — chips, displays and next generation batteries – are the prop for our economy and the markets that are projected to grow significantly.”

He added that preemptive investment in research and development in the three fields is “imminent."

The government vowed to support shipbuilding through refund guarantees, which provide the buyer with a safe option to recover money already paid in case a shipbuilder defaults or a ship is not delivered.

“The environment is favorable,” said Jang Young-jin, first vice minister of trade, industry and energy. But sufficient supply of refund guarantees have to be made available so shipbuilders are able to bag more deals, Jang added.

“Considering refund guarantees are calculated based on past indicators, deals could be disrupted at a time like this when their performance is recovering.”

The government will negotiate with commercial banks to issue additional refund guarantees when the limit is reached. State-run Korea Development Bank and The Export-Import Bank of Korea will push for the additional issuance of refund guarantees and also negotiate with overseas financial institutions to issue the guarantees.

Hyundai Heavy Industries has achieved 31 percent of its annual sales target, Samho Heavy Industries 138 percent, Samsung Heavy Industries 21 percent and Daewoo Shipbuilding & Marine Engineering 11.5 percent.

Shipbuilding orders totaled 15.59 million compensated gross tonnage (CGT) last year, up 55 percent from 2019.

BY JIN MIN-JI [jin.minji@joongang.co.kr]