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According to Yonhap News,
(SEOUL=Yonhap News) South Korea plans to inject more than 5 trillion won (US$4.1 billion) into its support of the local parts and material industries by 2022 in a bid to tackle Japan's export curbs against the South, cut dependence on Japanese imports and boost localization, the industry ministry said Wednesday.
The move is aimed at stabilizing supplies of parts, materials and equipment, and spurring their localization, as South Korea seeks to reduce heavy reliance on imports of Japanese materials.
Under the scheme that will run from 2020 to 2022, the government plans to select more than 100 vital industrial materials, parts and equipment to foster related research and development (R&D) projects by the end of this year.
The government will also help speed up the implementation of three R&D projects worth 1.9 trillion won, which have recently received government waivers for preliminary feasibility studies.
"Through strategic investment in research and development projects for materials, parts, and equipment, (South Korea) will ease its external dependency in such areas," the industry ministry said in a statement.
The products will receive customized support considering their level of technology and possibility of finding alternatives import sources.
The ministry did not reveal details on the 100 items, citing industrial confidentiality. South Korea, however, has been putting emphasis on fostering its chip, display, automobile, electronics, machine, and chemical industries since earlier this year.
Japan implemented export restrictions of key industrial materials to South Korea last month. The neighbor also officially dropped Seoul from its list of trusted trade partners, which took effect earlier in the day.
"While there has been no direct damages observed (by Japan's export curb), local firms have been expressing concerns over the uncertainties," the Prime Minister's Office said in a statement. The statement said the government has been working closely with the private sector to cope with the trade row.
"The government will promptly roll out countermeasures to deal with all possible scenarios of Japan's actions," it added.
Any companies suffering damages from Japan's export curbs will be assisted with necessary financial support under cooperation with the trade ministry and the Financial Services Commission, the office said.
Finance Minister Hong Nam-ki also stressed the need to achieve independence in parts and materials industries, identifying it as "the calling of the time." In his Facebook post, he criticized Japan's "arbitrary cutoff of trade linkages" with South Korea that ignores the international structure of division of labor.
"Key is to establish a sound, win-win ecosystem between the supply and demand sides of materials, parts and equipment, as well as between large firms and small to medium-sized companies," the minister wrote, vowing efforts to ensure that robust value chains among local business entities take root.
Last week, South Korea's trade ministry, which has been making preparations to file a complaint with the World Trade Organization, also started the process to drop Japan from its list of trusted trading partners, in a tit-for-tat move.
Tokyo claims that its export curb was motivated by South Korea's lax export control of sensitive goods.
South Korea, which rebutted Japan's allegations, claims the unprecedented move is retaliation for its court rulings that ordered Japanese firms to compensate Koreans forced into labor during Tokyo's 1910-45 colonial rule of the Korean Peninsula.
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Source: Yonhap News (August 28, 2019)