The Financial Services Commission held a meeting with major banks, policy financial institutions along with the relevant government ministries on August 16 and announced a set of measures aimed at boosting support for the export industry. The announcement is a follow-up to the presidential export strategy meeting held in February, and the measures reflect opinions raised during FSC’s meeting with the export sectors held earlier in May.

Key details of the measures include (a) proving strategic support for domestic export businesses to more effectively prepare them for the rapidly changing global trade structure, (b) strengthening the medium- to long-term competitiveness of the strategic export sectors by expanding the size of export finance and (c) reducing the burden of using trade finance for some 2,500 outstanding export businesses selected by the government.

Providing strategic support for domestic export businesses

First, for exporters seeking to find a new export market or businesses seeking to explore export opportunities in partnership with a large exporter, special financial products worth KRW4.1 trillion-plus will be provided with the availability of interest rate reduction of maximum KRW1.5 percentage points and benefits for guarantee fees and maximum lending limit. To help domestic enterprises to win large-scale oversees project orders, policy financial institutions will each play a role in setting up a project package financing model in which private financial institutions can also participate. At the same time, a KRW500 billion worth of fund will be created to more effectively respond to the shifting global supply chain environment. The fund will provide support for the materials, parts and equipment businesses and provide funds needed to expand their business operation in export destinations or set up new production facilities in another country.

Strengthening the medium- to long-term competitiveness of strategic export sectors

Policy finance support worth KRW41 trillion will be provided to the twenty strategic export sectors this year. Additional KRW13.3 trillion in export finance products will be made available by policy financial institutions to support facilities investment and research and development costs of export businesses. The five major commercial banks will provide KRW5.4 trillion in support through either investing in the guarantee institutions or introducing their own export finance products with interest rate reduction of up to 1.5 percentage points and guarantee fee reduction of up to 0.8 percentage points.

Reducing the burden of using trade finance for outstanding export businesses

For the government-recognized small- and medium-sized export businesses and middle market enterprises, the following measures will help to reduce their burden of using export finance. First, a maximum 1.7 percentage point discount rate will be offered to banks when they purchase export bills of exchange. For imports of intermediary goods, the fee for issuing an import letter of credit will be reduced by maximum 0.7 percentage points, while the maturity will be expanded to up to one year. Also, to help export businesses to more effectively prepare for the risk of volatility in foreign exchange rates, forward exchange contract fees will be lowered by maximum 90 percent.

At the meeting with the heads of major banks and policy financial institutions, FSC Chairman Kim Joo-hyun said that the export industry is at the core of ensuring a speedy economic recovery and guaranteeing stability in the foreign exchange market and creating quality jobs through growth. In this regard, Chairman Kim said that the export finance support measures worth KRW23 trillion have been prepared to reinvigorate our export industry, promote active participation by commercial banks and broaden the eligibility of support to include middle market enterprises.

* Please refer to the attached file for details.