Government’s Plan to Support Other Industries Still Valid
The South Korean government voted on May 12 for the amendment to the enforcement decree of the Korea Development Bank Act for key industry stabilization fund establishment.
According to the amendment, the 40 trillion won fund will go only to the aviation and shipping industries, instead of previously planned seven, and fund support for the other industries will be determined based on inter-ministerial talks. In addition, companies benefiting from the fund must maintain at least 90 percent of their total employment.
In the pre-announcement of legislation, the fund was to be spent in the seven industries of aviation, shipping, machinery, automobile, shipbuilding, electric power and communications and spending in the other industries was subject to request to and approval by the Financial Services Commission after discussion with the Ministry of Economy and Finance.
According to the amendment, however, the financial assistance is limited to aviation and shipping and the other sectors are subject to determinations by the Financial Services Commission and the Ministry of Economy and Finance. “The stipulation of the two sectors is for legal reasons and the government’s plan to support the seven industries is still valid,” the commission explained, adding, “In addition, the other sectors can benefit if they need it and discussions go well.”
Some experts point out that the reduction in the number of beneficiaries has to do with the possibility of WTO litigation in the event of support for manufacturing sectors such as shipbuilding and automobile. In February this year, Japan made an issue of the Hyundai Heavy Industries-Daewoo Shipbuilding & Marine Engineering merger by bringing the South Korean government’s shipbuilding industry restructuring plan to the WTO.