S. Korea to create 5 tln-won fund for supply chain resilience, economic security

The government will create a 5 trillion-won (US$3.59 billion) fund to extend low-interest rate loans for companies playing a major role in ensuring stable supply chains and will provide tax incentives for corporate development of key technologies, the finance ministry said Thursday. It is part of the government's comprehensive plan meant to stabilize supply chains of major materials and enhance economic security amid intensifying global supply chain challenges, particularly as South Korea is heavily dependent on foreign countries for supplies of natural resources and some major materials. On Thursday, the basic law on supply chain stabilization came into force. Under the plan, the government will designate leading businesses that work to diversify their import channels of major industry items or develop substitute technologies to reduce foreign reliance and provide them with cheap loans for three to five years. It will activate up to 5 trillion won of supply chain stabilization funds, starting in the seco nd half of this year. The government also decided to add 100 more items to its "economic security items list" to make it comprise a total of 300 items regarding the manufacturing, defense, logistics, cybersecurity and other sectors closely linked to the everyday lives of the people. The ministry refused to make the details of the items public, citing security matters, though experts said urea, lithium, graphite and other materials are projected to be on the list. The items will be divided into three categories in accordance with their importance, and the government will draw up detailed plans to ensure their stable supplies. The government will review the list once a year, according to the ministry. Various tax incentives for research and development projects for key technologies will be available. Companies will be entitled to enjoy tax benefits if they develop natural resources overseas and bring them home, and a greater tax cut will be offered for investment in foreign subsidiaries for overseas resou rce development. In line with the new law on supply chains, the government will set up a three-year basic plan for longer-term responses, and the new commission led by the finance minister was launched for pan-government policy management. "The government will push for action plans to respond to complex global crises and supply chain disruptions and to enhance our economic security," Finance Minister Choi Sang-mok said during the inaugural meeting of the commission. Source: Yonhap News Agency