S. Korea to help small exporters deal with stronger won

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SEOUL, May 14 (Yonhap) -- South Korea will take diverse measures to help small
and mid-size exporters cope with a strengthening local currency and rising energy
prices, the government said Thursday.
The Korean currency jumped to 1,244 won against the U.S. dollar on Wednesday from
1,570 won on March 2, with international oil prices for the benchmark Dubai crude
rising from an average of US$45.58 in March to $55.38 in the first 12 days of
this month.
The measures call for expanding foreign exchange insurance coverage and
supporting overseas marketing efforts for small and medium enterprises (SMEs),
the Ministry of Knowledge Economy said.
"The steps are needed because SMEs do not have the manpower or expertise to
manage foreign exchange risks and carry out marketing efforts that can offset
unfavorable developments," it said.
Lower energy prices and the weak won have contributed to improved price
competitiveness for locally made products.
South Korean exports decreased 23.2 percent on-year into April, but local
companies have managed to increase market share in many countries due to sharper
falls in outbound shipments from rivals like Japan and Taiwan.
A ministry official said that every effort will be made to help local companies
maintain their export drive in the coming months.
"Because there is a lag time of about three months for foreign exchange rates to
take effect, SMEs should not feel the pinch of the stronger won until around July
or August," he said. "The government needs to plan ahead to reduce the fallout,
especially if the won appreciates further."
He said a joint civilian-government task force will be set up to monitor
challenges facing SMEs and to explore ways to help companies improve global
competitiveness through quality control and technology development.
The ministry in charge of the country's industrial and trade promotion policies,
meanwhile, said the effects of the stronger won will likely be felt most in
textiles, general machinery and electronic information industries, where there is
a larger number of SME exporters. Electronic information refers to computer
hardware and software development, operating systems, Web-based information and
applications, various telecommunications products, and video equipment.
It said many textile companies and electronic information businesses have hinted
they may start to lose price competitiveness if the local currency rises to 1,100
won to the greenback.
For general machinery, the ministry said general fall-off in demand worldwide,
coupled with higher overseas prices brought on by unfavorable exchange rates,
could hinder outbound shipments and exacerbate South Korea's chronic trade
deficit with Japan.
The ministry, however, said fluctuations in exchange rates will have relatively
less impact on automobiles, shipbuilding, semiconductors, displays and
petrochemicals. These industries are usually dominated by the country's
conglomerates.
yonngong@yna.co.kr
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