ID :
41422
Mon, 01/19/2009 - 10:19
Auther :
Shortlink :
https://www.oananews.org//node/41422
The shortlink copeid
Conglomerates, banks to give SMEs 700 bln won in fresh loans
SEOUL, Jan. 19 (Yonhap) -- A number of South Korean banks and conglomerates have agreed to forge a loan support deal that will give hard-pressed parts suppliers access to 700 billion won (US$514.7 million) in fresh loans, the government said Monday.
The Ministry of Knowledge Economy and the Financial Services Commission, the
nation's financial watchdog, said Hyundai Motor Co., steelmaker POSCO and
chipmaker Hynix Semiconductor Inc. will invest a combined 21 billion won into a
support fund to help their vendors. The nation's leading lendors -- Industrial
Bank of Korea, Shinhan Bank and Woori Bank -- will contribute a matching amount.
"The total 42 billion won will then be invested into the Korea Credit Guarantee
Fund and the Korea Technology Credit Guarantee Fund, which will use the money to
fully cover bank loans to parts suppliers," said Deputy Minister Kim Young-hak,
head of the ministry's industrial policy office.
The investment scheme, he said, will in effect provide small- and medium- sized
enterprises (SME) with up to 700 billion won in loans.
The three conglomerates are familiar with the growth potential and financial
health of their parts suppliers, Kim said, and will be permitted to designate
recipients of long-term, low interest loans. The government will oversee loan
distribution to ensure that money reaches healthy SMEs experiencing short-term
liquidity shortages, he added.
"The new SME support scheme is different from other funds as both conglomerates
and banks are making investments, which they know can be lost, while helping the
conglomerates' parts suppliers," the official said.
Joint funds have been used to bolster the financial strength of SMEs in the past
but have rarely been extended to smaller vendors, which typically require the
most help in times of economic uncertainty.
Kim said the money will not only help SMEs that supply parts to these companies
but to others as well who have business deals with Ssangyong Motor Co. and GM
Daewoo Auto & Technology Co. Many local car and electronic parts companies have
contracts with several manufacturers.
Ssangyong, South Korea's smallest automaker, requested court receivership early
this month to avoid bankruptcy. GM Daewoo halted production last month to deal
with a rise in inventory.
"The arrangement is the first of its kind, and there are other tie-ups on the
horizon that will help more small businesses," Kim said without elaborating.
The support arrangement is part of the government's ongoing effort to help parts
suppliers, which are among those hardest-hit by the economic slowdown.
Seoul cannot directly help individual companies facing liquidity problems because
of World Trade Organization rules, but is allowed to give tax breaks or take
other measures to facilitate the flow of funds.
yonngong@yna.co.kr
(END)
The Ministry of Knowledge Economy and the Financial Services Commission, the
nation's financial watchdog, said Hyundai Motor Co., steelmaker POSCO and
chipmaker Hynix Semiconductor Inc. will invest a combined 21 billion won into a
support fund to help their vendors. The nation's leading lendors -- Industrial
Bank of Korea, Shinhan Bank and Woori Bank -- will contribute a matching amount.
"The total 42 billion won will then be invested into the Korea Credit Guarantee
Fund and the Korea Technology Credit Guarantee Fund, which will use the money to
fully cover bank loans to parts suppliers," said Deputy Minister Kim Young-hak,
head of the ministry's industrial policy office.
The investment scheme, he said, will in effect provide small- and medium- sized
enterprises (SME) with up to 700 billion won in loans.
The three conglomerates are familiar with the growth potential and financial
health of their parts suppliers, Kim said, and will be permitted to designate
recipients of long-term, low interest loans. The government will oversee loan
distribution to ensure that money reaches healthy SMEs experiencing short-term
liquidity shortages, he added.
"The new SME support scheme is different from other funds as both conglomerates
and banks are making investments, which they know can be lost, while helping the
conglomerates' parts suppliers," the official said.
Joint funds have been used to bolster the financial strength of SMEs in the past
but have rarely been extended to smaller vendors, which typically require the
most help in times of economic uncertainty.
Kim said the money will not only help SMEs that supply parts to these companies
but to others as well who have business deals with Ssangyong Motor Co. and GM
Daewoo Auto & Technology Co. Many local car and electronic parts companies have
contracts with several manufacturers.
Ssangyong, South Korea's smallest automaker, requested court receivership early
this month to avoid bankruptcy. GM Daewoo halted production last month to deal
with a rise in inventory.
"The arrangement is the first of its kind, and there are other tie-ups on the
horizon that will help more small businesses," Kim said without elaborating.
The support arrangement is part of the government's ongoing effort to help parts
suppliers, which are among those hardest-hit by the economic slowdown.
Seoul cannot directly help individual companies facing liquidity problems because
of World Trade Organization rules, but is allowed to give tax breaks or take
other measures to facilitate the flow of funds.
yonngong@yna.co.kr
(END)
