Emergency Ministerial Meeting on Economic Affairs and Meeting on Export and Investment Promotion

Deputy Prime Minister Kyungho Choo convened the Emergency Ministerial Meeting on Economic Affairs and Meeting on Export and Investment Promotion at the Government Complex-Seoul on September 4 to discuss; 1) additional support measures to boost exports and 2) measures to facilitate Chinese tours to Korea.

The following is a summary of DPM Choo’s remarks.

Recently, the Korean economy appears to be in the beginning stages of recovery with monthly volatility.

Although industrial activities in July were weakened due to temporary factors such as adverse weather conditions, export recovery and services industry improvement continue.

In particular, exports, which is a key driver of economic rebound in the second half of the year, saw a much smaller decline - mainly in semiconductors - in August compared with the previous month despite the impacts of summer holidays.

The trade balance recorded three consecutive months of surplus thanks to a gradual recovery in exports and stable import prices, showing a favorable trend than initially expected.

In September, the decline in exports is expected to ease further along with the continued trade surplus, and exports are projected to turn positive during the fourth quarter.

However, as uncertainties in external financial conditions including China’s economic situations still persist, the government will not let its guard down and stay vigilant in monitoring financial situation going forward; it will make pan-ministerial policy efforts to stimulate domestic consumption by revitalizing inbound tourism and strengthen the momentum of export rebound, while being wary of falling into excessive pessimism and optimism in assessing the future economic trends.

1. Additional support measures to boost exports

The government will promptly enhance support for export infrastructures such as trade finance, marketing, and customs and logistics, to restore export vitality.

First of all, both the private and public sectors will jointly provide trade and export financing up to 181 trillion won by the end of the year to address financial difficulties of exporters.

Second, it will increase the provision of export vouches up to 168 billion won (up 16.5 percent) and add support items, aiming to improve service user’s convenience; the amount of voucher support allocated to agriculture and food export will also be significantly expanded (4.4 billion →32.8 billion won), and logistics subsidies for fresh food such as strawberries and pears will be temporarily raised from 15 percent to 25 percent by the end of the year.

Not only that, in order to diversify Korea’s export destination, it will assist exports and winning contracts through the intergovernmental cooperation in emerging markets such as the Middle East and ASEAN, as well as the dispatch of a working group to support contract bidding; a 250 billion won-special account of the Export-Import Bank of Korea will be established to help Korean companies to win large-scale contracts such as building plants and transportation infrastructures in lower credit countries with high growth potential.

Last but not least, in pursuit of a structural expansion of exports, it will spur enhancing Korea’s industrial competitiveness; starting next year, reshoring companies in the national high-tech strategic industries will receive increased subsidies by a maximum of 50 percent from the current 29 percent. It  will also push for the exemption of preliminary feasibility studies for public agencies to expedite the establishment of Yongin semiconductor industrial complex.

2. Measures to facilitate Chinese tours to Korea

The government, along with the local government and the private sector, will jointly make best endeavors to respond to the evolving Chinese tourism trend with a goal of attracting 1.5 million Chinese tourists in the second half of the year.

Above all, K-tourism road shows1 will be held in Beijing and Shanghai this month, and planned to be held in five cities in China next year. In addition, it will strengthen local marketing by temporarily waiving visa processing fees for Chinese group tourists through the end of the year.

Furthermore, it will improve convenience of people visiting Korea by adding more than 250,000 merchants that accepts payments from Chinese mobile payment services including Alipay, mainly in the popular tourist destinations, as well as expand immediate VAT refund services.