Gov't launches $3.7 billion fund to secure supply chains for domestic firms

Economy

Gov't launches $3.7 billion fund to secure supply chains for domestic firms

Published: 05 Sep. 2024, 16:58

SHIN HA-NEE
shin.hanee@joongang.co.kr

Finance Minister Choi Sang-mok speaks during a launching ceremony of a supply chain stabilization fund at the headquarters of the Export-Import Bank of Korea in western Seoul on Thursday. [MINISTRY OF ECONOMY AND FINANCE]

A government fund worth up to 5 trillion won ($3.7 billion) aimed at establishing stable supply chains launched on Thursday, amid rising protectionism worldwide.

The fund, operated by the Export-Import Bank of Korea (Korea Eximbank), will be used to provide financial support for domestic firms to enhance self-sufficiency in key items and diversify import channels.

"The era of 'de-globalization’ has arrived with U.S.-China tensions, ongoing interstate wars and the climate crisis, where the things we once took for granted are no longer the norm,” said Choi Sang-mok, the minister of economy and finance, in his remarks during a launching ceremony held at the Korea Eximbank headquarters in western Seoul on Thursday.

“Now what is essential for a company to survive is no longer the most cost-effective supply chain, but the most resilient one,” stressed the minister.

Choi called for stronger public-private cooperation in establishing stable supply chains, adding that the fund should serve as a platform for collaborative information-gathering as well.

The fund will be used to facilitate the domestic production of products crucial for economic security, the diversification of import channels and the enhancement of technological self-sufficiency, which are “essential areas yet difficult for companies to afford on their own,” according to Choi.

The government will raise up to 5 trillion won for the fund by issuing government-guaranteed bonds within the latter half of this year, with plans to expand the fund to up to 10 trillion won next year.

The Eximbank set four key areas of focus: cutting-edge sectors with strategic significance, resource security, essentials for the national economy and industry, and logistics. The fund will be utilized to provide loans with maturities of up to 10 years for projects involved with securing key materials, investing in and operating domestic and overseas facilities and more.

“The fund is a policy-financing program focused on supply chains as part of the government’s broader policy initiative to address potential global supply chain risks,” said Eximbank Chairman and CEO Yoon Hee-sung.

“We will proactively support Korean companies to withstand and overcome any supply chain risks through loan products tailored to meet the companies’ financial need at each stage of the value chain,” said Yoon.

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