This is the first article in a series of “Creative Korea Leadership – K-Trade” provided in partnership with Ministry of Trade, Industry and Energy.

SEOUL, KOREA - The government has decided to bring back the trade and investment promotion meeting for the first time in four years with the goal of activating the export ecosystem and creating a favorable investment environment.

"The revival of the meeting, which was first held in 1962 to promote trade and investment, reflects the government's strong desire to rehabilitate the economy through activation of exports and investment," said Kwon Pyung-oh, Deputy Minister for International Trade and Investment of the Ministry of Trade, Industry & Energy.

"In accordance with this, the ministry will put forth strong efforts towards helping the nation's small and medium-sized exporters solve serious difficulties stemming from the recent global financial crisis and the weak yen phenomenon," he continued.

In an interview with Korea IT Times, Kwon also said, "The government will ease irrational regulations on business activities as a means of activating corporate investment as well as actively help enterprises solidify their export will."

Special steps to expand support for small and medium-sized exporters

The nation's small and medium-sized exporters are suffering serious difficulties these days. The reason for this is largely due to intensifying exchange rate volatility in the wake of the weak yen and the economic downturn.

According to a survey conducted by the Korea International Trade Association in March regarding major difficulties facing exporters in the second quarter of 2013, the biggest factors were expansion of the exchange rate volatility (29.5%), economic slump & intensified competition (28.4%), and strengthening of import regulations (5%).

"Domestic exporters are experiencing a variety of difficulties in their attempts to advance into foreign markets because of wide fluctuations of the exchange rate following the weak yen, worldwide economic slowdown and tough import regulations," said the deputy minister.

"To assist the nation's small and medium-sized exporters who are suffering from decreased profitability and weakening of export competitiveness amid persistent unfavorable external environmental factors, the government has mapped out special measures to expand the support available for them," he said.

Concrete contents of special trade financing

Asked about the government's concrete plan to support small and medium-sized exporters, Deputy Minister Kwon said, "The ministry will extend 11.1 trillion won in special trade financing to smaller exporters facing difficulties securing the funds necessary for exports because of unfavorable external conditions."

As a result, the volume of trade financing for small and medium-sized exporters for 2013 has expanded from the original 71 trillion won to 82.1 trillion won.

The special trade financing will be broken down into 1.3 trillion won for those fighting against the weak yen, 6.3 trillion won for small and mid-sized exporters, 1 trillion won for overseas construction and plant projects, and 2.5 trillion won for ship financing.

"To finance the project, the government will mobilize 130 billion won from the supplementary budget and commercial banks will make special contributions amounting to 300 billion won," he explained.

The ministry plans to expand loans and payment guarantees to small and mid-sized exporters and assist them with tailor-made trade insurance.

"In particular, the ministry will significantly expand the current exchange risk insurance undertaking volume for small and mid-sized exporters to 1.3 trillion won this year in a bid to help companies minimize damages from the continually weakening yen," said Kwon.

Small and mid-sized overseas construction and plant companies, which are facing difficulties securing overseas orders owing to financial institutions' low aid ceiling, will receive 1 trillion won in special financing.

"Through appraisal of business feasibility, the ministry will double the ceiling on export guarantee insurance assistance, while offering mid- and long-term export insurance service in advance to overseas construction and plant companies," he said.

Shipbuilders and tools and materials manufacturers facing hardships securing funds necessary for the construction of ships owing to the slumping shipping business will also receive 2.3 trillion won in ship financing from the initiative this year.

Measures to cope with the weak yen

In addition to the expansion of the exchange risk insurance, the government plans to provide heightened assistance for Korean exporters suffering from weakened export competitiveness caused by the weak yen. This will be accomplished through the expansion of FTA use and assistance of export marketing activities.

"First of all, the ministry will provide small and mid-sized exporters with an FTA place of origin management service to help them take advantage of the FTA and recover their price competitiveness in the global market," he said.

"The next step will involve dispatching experts to business spots and offering consultation services related to the whole management process of the place of origin to small and mid-sized exporters, while simultaneously strengthening the countermeasure system against post verifications of a trading partner," Kwon noted.

Along with this, the ministry is moving to accelerate advancement into foreign markets by smaller domestic exporters with no export experience through the implementation of professional export agencies and the establishment of a system used to solve problems at export locations.

Related to this, the government plans to introduce a system that designates and fosters professional trade agencies through the revision of the External Trade Law in 2013.

It will also make initial export experience available to domestic sales-oriented companies through discovery and matching of buyers and assistance of actual contract business.

"For smaller companies in agricultural and industrial estates, which generally have experienced difficulty securing proper export assistance, the ministry will expand its on-the-spot export service availability," said the deputy minister.

"Finally, we will make a strong push for small and mid-sized firms' exploration of overseas markets by organizing overseas sales exhibitions or the expansion of the overseas branch establishment project," he added.

Smaller exporters' five major bottlenecks in exports

The government has located the five major bottlenecks that smaller exporters commonly encounter in promoting exports and announced a series of steps to solve such problems. The five steps to solve the issues are maintaining stable receipts of overseas orders from shipbuilding material manufacturers, strengthening the English-written address guidance service, improving a system to expand online B2C exports, solving trading companies' difficulty related to the use of electronic trade, and exclusion of simple network equipment from the list of strategic materials.

"To help domestic shipbuilding materials manufacturers that are suffering from the global shipbuilding business slump, the government will move forward with issuing orders for ships by public institutions earlier than scheduled," he said.

Noting that foreign buyers sometimes fall into a state of confusion owing to the implementation of the new road address law, Kwon said, "The ministry will strengthen the road address guidance homepage (www.juso.go.kr) service further in order to ease confusion and make the process more efficient."

Construction of spot-oriented export support system

The ministry plans to prepare an export support system that is able to discover exporters' difficulties immediately and suggest solutions, centering on the trade and investment promotion meetings held on a quarterly basis.

"On this note, the ministry will bolster local trade and commerce functions in foreign countries centering on Korean diplomatic missions overseas and build a one stop export support system through linkage with relevant institutions. This initiative will be led by the Small and Medium Business Export Support Center," he said.

In addition, the ministry will hold an export investment support consultation meeting every month to assess the export assistance system as well as utilizing KOTRA as an institution specialized in supporting small and mid-sized firms' overseas advancement.

"To enhance synergistic effects of various export boosting measures, finally, the ministry will activate information sharing and maximize efficiency of various projects. This will be done through operation of regular CEO meetings from export supporting institutions and strengthening cooperative programs," he added.

By Monica Chung (monica@koreaittimes.com) 다른기사 보기