S. Korea Pledges Support for Firms Affected by Japan’s Curbs
(Bloomberg) -- South Korea's Financial Services Commission said it will give “swift and sufficient” financial support to companies affected by Japan's export restrictions in an effort to limit the impact on the economy.
Financial institutions including the Korea Development Bank will immediately extend the debt maturity of companies affected by Japan's export restrictions by a year, while commercial banks will voluntarily carry out the measure, FSC Chairman Choi Jong-ku said in a statement on Saturday.
South Korea and Japan stepped up their fight over trade this week, leaving little room for a quick way out in the dispute that threatens security ties and supply lines. Japan removed South Korea from a list of trusted export destinations, while the latter said it plans to cross its neighbor off a preferred-trade list.
The South Korean government plans to expand liquidity supply through various supporting programs, according to the FSC. It is prepared to stabilize markets, Choi said. The FSC has started operating an emergency response team to monitor the situation and its impact on businesses.
South Korea's parliament approved an extra budget on Friday to support a sluggish economy. It included about 273.2 billion won ($228 million) as a response to Japan's expanded export restrictions.
The finance ministry is also looking at possible budget and tax measures to minimize the damage from the Japanese curbs, according to a statement. Finance Minister Hong Nam-ki ordered the ministry to monitor the impact of the restrictions on the economy and markets. The ministry should approve extended working hours for companies affected by the issue, Hong said.
The removal of Japanese firms from the preferred-trade list is expected to be effective this month. It will threaten South Korea's semiconductor and display sectors as uncertainty over imports of key materials from Japan makes it harder for companies to plan operations, further disrupting key supply chains.
To contact the reporter on this story: Sohee Kim in Seoul at skim847@bloomberg.net
To contact the editors responsible for this story: Shamim Adam at sadam2@bloomberg.net, Marcus Wright, Jake Lloyd-Smith
©2019 Bloomberg L.P.
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