7th Meeting of Central Economic Response Headquarters
24th Ministerial Meeting on the Economy
Government to Support Suppliers
Deputy Prime Minister Hong Nam-ki presided over the 7th Meeting of the Central Economic Response Headquarters, that is the 24th Ministerial Meeting on the Economy, held on June 19. Working capital support for suppliers and plans to ease COVID-19 border restrictions on businesspeople and trade goods are main topics of discussion. DPM Hong urged the National Assembly to quickly pass the 3rd supplementary budget proposal at the beginning of his keynote address.
The following is a summary of DPM Hong’s keynote address.
Quickly pass the 3rd supplementary budget proposal
The economy is showing signs of recovery as consumption and consumer confidence improve. Furthermore the country climbed five notches in IMD’s World Competitiveness Index released recently. Amid these signs of improvement, it is crucial to financially support pandemic-hit businesses and households for the real economy to ride out the crisis. We need funds from the 3rd supplementary budget to support the over 135 trillion won business support packages, 580,000 job retention programs, emergency reliefs for independent contractors, over 550,000 public job creation initiatives and some of the measures in 2020’s second-half policies. I urge the National Assembly to pass the 3rd supplementary budget bill this month.
Topics of discussion
1) Working capital support for major manufacturing suppliers
Despite their importance in a supply chain, many of the major manufacturing suppliers are cash-strapped and have hard time getting credit due to credit limits. The government will help them with addressing sudden shortfalls in working capital.
- Provide a total of 5 trillion won through an SPV from July, which will buy their debt and issue P-CLOs
- One trillion won of the 5 trillion won to be financed with the Key Industry Support Fund
- Extra funding beyond credit limits to be made available for those suppliers through the program
2) Financial support for auto part suppliers
- Over 2 trillion won worth of financial support through loans, guarantees and loan extensions
- Suppliers with lower credit limits to receive the support
- Two trillion won to include 270 billion won (special guarantees), 30 billion won (joint guarantees for future car projects), 350 billion won (Inclusive Growth Loan from state-owned banks), 300 billion won (accounts receivable financing by Korea Asset Management Corporation), 1 trillion won (loans from KDB) and foreign asset secured loans from Korea Exim Bank
- Provide loan extensions for up to one year: The program will cover loans in state-owned banks, as well as in five major commercial banks
3) Ease COVID-19 border restrictions on businesspeople and trade goods
- Business travel control: Work to expand a fast-track immigration arrangement with China to other countries, including Vietnam, Singapore and UAE
- Trade control: Expand logistics cooperation with trade partners
- Participate in multilateral cooperation for a global framework for travel via APEC, G20 and ASEAN+3
4) Encourage the public sector to adopt digital solutions
- Encourage the public sector to adopt cloud computing and other digital solutions to help “untact” industries develop
- Introduce “free contract” and revise the procurement catalog to promote digital solutions in the public sector