Banks have been reluctant to issue letters of credit to the recently declared bankrupt Korean motor giant, Daewoo, according to the Korea Automobile Manufacturers Association (KAMA). Since Ford Motors pulled out of negotiations to buy Daewoo last month, KAMA says the motor manufacturer's credibility has suffered and its creditors have stopped funding, hurting production.

KAMA has asked Seoul and the carmaker's creditors to inject more funds into Daewoo keep production rolling. But the effects of Daewoo's bankruptcy have rippled around the world, and domestic and foreign contractors are putting off supplying car parts.

The Australian arm of General Motors, GM Holden's Ltd, has said it aimed to cut 300 jobs from its workforce of 2.000 after losing sales to Daewoo Motor, its biggest customer. According to a company spokesman, production would stop for 10 days in November and resume in December at a lower rate. Meanwhile, GM Holden's November exports to Korea came to a halt when Daewoo's receivers refused to honour letters of credit.

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