News / Seoul government bolsters exports with new financial package for SMEs

Central Government building Seoul. © Yooran Park Dreamstime.com

South Korea president Yoon Suk-yeol has announced $260bn package of measures to ease inflationary pressure and boost exports.

Included is a $6.6m package to subsidise some 750 small and mid-sized exporters’ logistics costs and boost South Korea’s export competitiveness.

Seoul is also considering increasing the free storage duration for outbound containers, from three to four days, in Busan, the country’s main container port.

In addition, around $44m will be set aside for low-interest loans to SMEs suffering financial difficulties.

Since August, the Korea International Trade Association has been granting loans of up to $222,000 per SME, at annual interest rates of 2% to 2.5%. This latest government support adds to measures by the previous administration, a year ago, when Korean SMEs and start-ups were offered loans of up to $850,000 to cover logistics costs.

South Korea has suffered a trade deficit since April, as imports surpassed exports, the first time in 14 years that the country has had a trade deficit for five consecutive months.

August exports of consumer goods to the US were up 14% on July, to $8.76bn; exports to the EU increased by 7%, to $5.4bn; while those to Asean countries grew 22% to $10.86bn. CIS-bound exports declined by 11%, to $860m, due to the disruption caused by Russia’s invasion of Ukraine.

However, the runaway increase in energy prices has resulted in the value of imports exceeding that of exports, as imports of oil, gas and coal surged by 89% in August.

Overall imports last month jumped 28% year on year, to $66.15bn, a record figure, even though exports also registered a monthly high of $56.67bn, up 7% year on year.

Trade, Industry and Energy Minister Lee Chang-yang said: “We will work together to ensure that exports, which have been a strong support for our country’s economic growth, can contribute to overcoming the trade imbalance.”