The FINANCIAL — South Korea will extend additional trade financing to local exporters until 2016 as part of its efforts to prop the country’s sputtering exports, the trade ministry said on July 9, according to Nasdaq.
The planned 16.2 trillion won ($14.2 billion) in extra state financing will largely be used by small exporters to obtain cheaper loans or secure insurance policies against possible business losses in trade with other countries, the ministry said, announcing a government package of policies to boost Korea’s exports.
Exports–which account for half of Korea’s growth–have recently suffered from weak global demand. Shipments overseas fell 1.8% from a year earlier in June–a sixth straight monthly decline. Seoul sees China’s slowing but advancing economy as a challenge for local exporters. China absorbs a quarter of Korea’s total shipments overseas.
The ministry’s package included various policy steps and support designed to encourage Korean companies to market and sell more of their quality consumer goods and finished products online in China.
Most Korean firms have so far shipped partly-finished goods for Chinese manufacturers to assemble into finished products bound for third countries, but Chinese firms are now producing more of those intermediary goods on their own.
The package also promised tax breaks and other incentives for Korean manufacturers overseas to return home, and also promised financial support for businesses to invest in technology development in order to keep a lead in global markets.
The ministry said it would help Korean firms relocate to new emerging markets like Vietnam or Mexico to boost exports, and continue expanding the country’s free trade deals with other countries in central Asia and Latin America.
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