Financial companies will offer bailout funds worth 700 billion won ($636 million) to the 123 financially troubled South Korean companies operating in the suspended Gaeseong industrial complex in North Korea, financial regulators said Friday.
Their emergency relief loans, aimed at preventing the firms from experiencing a liquidity crisis, were fostered after the North suspended operations of the complex by pulling out most of its 53,000 workers about a month ago in protest against a joint military drill between South Korea and the United States.
The Export-Import Bank of Korea will shoulder the largest part by providing the firms with bailout funds totaling 300 billion won. Woori Bank and the Industrial Bank of Korea are each scheduled to offer 100 billion won. The remaining 200 billion won will be issued by other commercial banks, insurance firms, private moneylenders and credit cooperatives.
“A company is allowed to apply for loans of up to 500 million won,” said an official of the Korea Eximbank.
The financial industry joined the movement of rescue funding worth 300 billion won from public agencies including the Korea Finance Corp.
The government-led bailout package consists of 63 billion won from the inter-Korean cooperation fund, 100 billion won from the small and medium enterprise promotion fund, and 100 billion won from the Korea Finance Corp.
It also includes 36.9 billion won from a special fund run by the Korea Credit Guarantee Fund and Korea Technology Financial Corp.
Meanwhile, the financial firms also decided to roll over former loans totaling 1.6 trillion won extended to the 123 firms.
The Financial Supervisory Service called on the financial sector not to retrieve their matured loans and instead offer rollovers without conditions.
“Financial firms also said they would actively cooperate with the regulatory policy,” said the FSS official.
Issuing the possibility that firms there could face serious cash flow problems should their subcontractors demand damages, the FSS has continued to stress that “the firms should not be financially undermined as the situation stemmed from geopolitical tension.”
The 123 firms, which are in labor-intensive industries such as textiles, clothing and electronic parts, initially stressed the normalization of the decade-old complex, but shifted their focus to recovering their losses.
Since Pyongyang unilaterally barred the entry of South Koreans and cargo into the park on April 3, the firms have been faltering, with their orders canceled, buyers reluctant to do business with them because of political uncertainty and other financial issues.
By Kim Yon-se (
kys@heraldcorp.com)
