S. Korea to extend W100b of trade financing to arms manufacturers this year

South Korea plans to extend 100 billion won ($75.84 million) in trade financing to subcontractors in the defense industry per year in the latest efforts to boost the country's global arms sales and prop up the domestic industry ecosystem, the industry ministry said Thursday.

The Ministry of Trade, Industry and Energy, the Defense Acquisition Program Administration and local banks signed a memorandum of understanding that calls for the financial support for smaller businesses in the field, as they face difficulties in fundraising amid high borrowing costs at a time when their role is crucial in boosting the country's arms exports.

The ministry will draw up detailed plans with agencies concerned to begin granting low-interest loans to them as early as this month.

The move came as the country has been working to beef up defense exports as it seeks to find a new economic growth engine and to secure technology prowess in the sector.

The government also announced the plan to invest 278.1 billion won this year in research and development projects to be conducted jointly by private firms and the military, according to the ministry.

This year's budget marked an 11 percent rise on-year, and was the highest ever figure.

The projects are meant to strengthen the country's defense capabilities and boost industrial competitiveness by further developing technologies in space, unmanned aerial vehicles, artificial intelligence and other advanced sectors, the ministry added.

The government vowed to draw up a roadmap by September on the development of materials and components needed for the defense industry, and to enhance cooperation with foreign defense companies.

Earlier this week, the government announced a plan to launch a private-public consultative body this month to help increase overseas arms sales. (Yonhap)