The South Korean government will consider ways to give preferential discount rates on export bills or extend the maturity of import letters of credit (L/C) for certain exporters as part of its plans to provide comprehensive financial support for the country's exporters.

The government will first focus support on companies exporting strategic products and then, if necessary, expand the scale, according to financial services commission chairman, Kim Joo-hyun.

Targeted sectors

The government is considering providing intensive support for companies exporting 20 strategic export items, including eight major manufacturing industries - semiconductors, secondary batteries, displays, electric vehicles, high value-added shipbuilding, machinery and robots, petrochemicals and steel.

It may also target what it considers to be 12 new export growth engines - such as bio-health, nuclear power plants, national defence, smart farming and information and communication technology services

Three support areas

The government's financial support plan comprises three types of intervention. As well as enabling preferential discount rates on export bills or extend the maturity of import L/Cs, the government will also enable commercial banks to provide services similar to those provided by policy finance institutions, including foreign currency loans.

The government will also offer investment incentives and financial support for research and development, with Korea Development Bank providing loans at preferential interest rates.

Mutual benefits

Extending the maturity of an import L/C can be beneficial for both the importer and the beneficiary.

For the importer, it provides more time to complete the necessary steps for receiving the goods, such as inspections or shipping arrangements. For the beneficiary, it ensures that they have more time to prepare and present the required documents, which can help prevent a potential financial loss.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.