Gov't to promote exports with increased financing, support SMEs

Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok speaks during a ministerial meeting on economic affairs at the government complex in Sejong on Monday. [YONHAP]

The government will scale up export financing by 5 trillion won ($3.6 billion) to 365 trillion won to further boost the recent export rally as Korea aims to achieve a record of $700 billion in outbound shipments this year.

The plan was announced during an economic ministerial meeting held in central Seoul on Monday, alongside a new program designed to significantly bolster support measures for small- and mid-sized enterprises (SMEs).

According to the Ministry of Economy and Finance and relevant ministries, the government will increase the amount of export financing from state-run financial institutions by 5 trillion won to a total of 365 trillion won this year to mitigate the financial burden on companies amid heightened external uncertainties in the global economy.

Five major commercial banks will also ramp up financial support such as loans by 2 trillion won to 7.4 trillion won.

The government also trimmed down regulations to strengthen the competitive edge in each export sector. For example, the authorities will up the limit on the number of trucks allowed to refuel liquefied natural gas (LNG) ships simultaneously from the current two to four in response to the growing number for LNG-fueled ships. Elsewhere, administrative procedures will be streamlined for used car exports as well as for technology exports in the automotive, battery and shipbuilding sectors with relatively low risks of technology theft.

Meanwhile, the Economy Ministry also fleshed out its new plan to help small companies scale up their businesses as part of their larger "Dynamic Economy” initiative aimed at driving growth and social mobility.

Under the latest plan, the government enacted a two-year extension of the tax incentive grace period for companies that grew out of their SME status to five years — with an additional two years granted for listed companies — as the current system discourages smaller companies from further expanding as they seek to keep their tax benefits. For those that qualify as middle-market companies, bigger than SMEs but smaller than large corporations by assets, the government will apply higher tax credits in research and development (R&D) investment and other capital expenditures.

Moreover, the ministry will provide consultation services to 100 SMEs with high growth potential to help them scale up their businesses. A 50 billion won fund, financed by both the government and the private sector, will be established this year to support R&D for small companies.

“The government will help the warmth of the recent economic recoveries spread to every nook and cranny of everyday livelihoods,” promised Finance Minister Choi Sang-mok.

"However, it is unfortunate that a number of economic and livelihood bills that would have helped the government's initiatives were scrapped with the conclusion of the 21st National Assembly’s term a few days ago,” said Choi, adding that the government will promptly reorganize key agenda items for the 22nd National Assembly, which began its four-year term on Sunday.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]