Daegu City (Mayor Kwon Young-jin) will organize a meeting at the Seongseo Industrial Complex, on Nov. 18, to discuss ways to proactively cope with notable external environmental changes, such as the phenomenon of a weak yen and the conclusion of the Korea-China Free Trade Agreement, to gauge difficulties such changes bring to local companies. The meeting will be attended by people from the Seongseo Industrial Complex, support organizations and related businesses.
The local economy has shown steady growth recently in terms of indicators. Industrial production grew at a rate higher than the national average, and the export growth rate was the second highest among Korean cities and provinces.
However, the operational rate of the companies in the Seongseo Industrial Complex is 73.19 percent at present, the lowest since the fourth quarter in 2009. The operational rate of small- and medium-sized companies, which had been continuously growing since early this year, has also been on a downturn since last May. Also, the Business Survey Index (BSI) on business conditions has fallen below the national average. Accordingly, the actual economy felt by local businessmen and consumers is getting worse.
While Japan’s additional quantitative easing in October is expected to accelerate and prolong the tendency of a weak yen, major export items of local companies, such as machinery and metal and auto parts, which are vying with Japanese products in the global market, are feared to lose their international competitiveness.
The successful negotiations of the Korea-China Free Trade Agreement is expected to contribute to the expansion of exports to China, the biggest importer of products from Daegu and Gyeongsangbuk-do. (China accounted for 23.2 percent of the region’s total exports in 2013.) However, the free trade agreement may also cause difficulties for the local textile industry where low-end products are concerned.
Accordingly, Daegu City plans to visit the Seongseo Industrial Complex to listen to the difficulties facing businesses concerning the uncertainties in external economic conditions, the textile, machinery and automobile companies, in particular. Major support organizations here will announce their plans to cope with such situations.
Major initiatives to be taken by Daegu City include:
Expansion of support for export companies by advancing the payment schedule of the 100 billion won “management stabilization fund” to late December this year (from 300 million to 500 million won; interest rate support: from 2 percent to 3 percent).
Targets: the companies with over 30 percent of their annual revenue formed by exports and those that export over $100,000 worth of goods a year (manufacturing, wholesale & retail businesses).
Plans to form a 30 billion won “special management stabilization fund,” for the event that the Japanese yen exchange rate falls below 900 Korean won, in order to provide up to 300 million won to a company in addition to support in the form of a 2 percent interest rate.
To develop new sales routes through the expansion of overseas machines and auto parts sales bases (from 19 to 21 cities in 14 countries) and the additional dispatch of trade missions
To strengthen support for companies obtaining international standard certificates (from 35 items of 29 companies to 50 items of 40 companies) and set up the FTA Support Center.
Six support organizations, including the Daegu-Gyeongbuk Small- and Medium-Business Administration and the Daegu-Gyeongbuk headquarters of the Korea International Trade Association, will announce measures to heighten the international competitiveness of local companies.
Daegu Mayor Kwon Young-jin said, “With the upcoming meeting as momentum, the city will provide active support for local businesses in their effort to cope with the changes in external environments. The city will cooperate with support organizations to turn the Korea-China FTA into an opportunity for recovery by the local economy. We will propose to the central government the settlement of problems difficult to solve by a local government so as to relieve the difficulties facing the local businesses.”
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