South Korea unveils $32bn relief fund for core industries

Linda J. Dodson

SEOUL — South Korea hammered out a 40 trillion won ($32.4 billion) relief fund Wednesday aimed at allowing businesses in backbone industries to keep workers on the payroll amid the coronavirus outbreak.

The emergency fund will be drawn up to fight the pandemic and safeguard jobs, President Moon Jae-in told an economic stimulus meeting. Support will go to seven key industries that employ a large number of people: airline, automobile, shipbuilding, maritime shipping, machinery, power and communications.

Companies in these industries will be eligible for loans directly extended by government-backed lenders such as the Korea Development Bank and the Export-Import Bank of Korea. Relief will also include syndicated loans with private-sector lenders, providing fresh capital in exchange for new shares, and investments through a special-purpose fund.

Aid recipients will be required to maintain jobs and restrict executive compensation and shareholder dividends. Injecting taxpayer money means imposing appropriate obligations, Moon said.

A separate 10 trillion won fund to fight unemployment was also established. The goal is to create 550,000 jobs, with hiring stepped up at organizations and facilities in the public sector. To help businesses keep jobs, the government will also expand a program covering a portion of jobless benefits for furloughed workers.

Since February, Seoul has completed measures to support small businesses and mom-and-pop stores and eateries, which were particularly pummeled by the coronavirus epidemic. Government aid arranged thus far, including emergency cash handouts to many families, has reached 240 trillion won — six times the relief given during the 2008 financial crisis. An extra budget will be formulated for the 40 trillion won expenditure on top of the 512 trillion won spending earmarked under the 2020 budget.

The cash handout program has hit a roadblock, however. Initial plans were to cover 70% of households, sending 1 million won each to four-person families and 400,000 won apiece to those living alone. But calls are growing within the ruling party for universal payouts to all households, delaying parliamentary approval of the supplementary budget.

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