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  • KITA Held a Trade Talk by Inviting The Minister of Trade, Industry and Energy
    2018-12-04 hit 686

    KITA Held a Trade Talk by Inviting The Minister of Trade, Industry and Energy

     

    Appendix

     

    Recommendations for Trade Industry

     

     

    1. Upgrading Manufacturing Industry and Fostering New Promising Export Industries

     

    Recently, industrial activity in the manufacturing industry has been shrinking and exports have been concentrated around specific items. Those are creating various concerns.

     

     The industrial production and production capacity index have declined and the economic indicators have been dropping for six consecutive months.

     

      Exports remained upward trend of 6.4% until October, but if semiconductor exports are excluded, the growth rate is shifted to -16.3%, which means that the export dependence on single item is serious.

     

        * Portion of semiconductor in total exports:  ‘12.6% in 2016’ ‘17.1% in 2017’ ’21.2% in January ~ October, 2018’

     

      Moreover, while the competitiveness of the existing major export items such as automobiles and displays has been clearly declining, new export products to replace them are not visible. Therefore, we are concerned about the future of Korea’s exports.

     

      In addition, as the export-oriented industries are struggling, the management of part suppliers is getting harder, and even the damages to the healthy ecosystem of Korea’s export industry are concerned.

     

      Please tell us what you are working on to overcome the current situation.

     

     

    2. Measures to Support Damaged Enterprises Due to Restored Iranian Sanctions

     

     

    On May 8 this year, US President Trump ordered to exit the Joint Comprehensive Plan of Action (JCPOA) and to re-impose sanctions on Iran. As a result, the sanctions were restored on major industries such as steel and automobiles on August 6th and on crude oil and finance on November 5th.

     

    Fortunately, Korea has been designated as one of the eight countries exempted and we can maintain a 180-day supply of crude oil and settlement accounts in KRW.

     

      However, it is anticipated that the exports to Iran of automobiles, refined oil products, petrochemical products, shipbuilding and other products subject to sanctions will be halted or reduced. Moreover, further decrease is expected as the US government has additionally banned trading with Iranian state-run or energy companies.

     

      Therefore, please tell us about the support measures for the companies that are expected to be affected.

     

     

    3. Requests for Simplification of Korea-India CEPA Criteria of the Determination of Origin and Expansion of Tariff Reduction Items

     

      India is one of the largest and the most promising markets as well as one of the crucial markets for Korean companies as a hub of the Korean government’s new southern policy

     

      To mark the eighth anniversary of the Korea-India CEPA, the Ministry of Trade, Industry, and Energy is working on to increase the utilization rate of the agreement by opening the "CEPA Utilization Support Center" in New Delhi in May of this year.

     

    However, the export utilization rate of the Korea-India CEPA Agreement is about 67.5%, which is lower than the total export utilization rate of FTA (70%). This is considered mainly due to the fact that the criteria of the determination of origin is stricter * than other FTA agreements.

     

          * Need to satisfy both subheading change rule and 35% value-added rule of origin

     

      In addition, automobile parts and steel, that are Korea’s major export items to India, are excluded from the schedule of concession, and the effect of tariff reduction is insignificant.

     

      Therefore, we would like to ask for your efforts to improve those issues in the ongoing negotiations for the improvement of Korea-India CEPA.

     

     

    4. Recommendations on Amendment of ‘U-Turn Enterprise Supporting Act’ to Strengthen Supports for U-turn companies

     

      In order to create jobs by attracting the Korean companies that went to overseas to return to Korea, ‘Act on Supporting the Korean Companies Returned from Overseas (U-Turn Enterprise Support Act)’ was established in 2013.

     

      Despite the enactment of this law, the number of companies that were selected as the returned companies were only ‘22 in 2014’, ‘4 in 2015’, ’12 in 2016’, and ‘4 in 2017’.

     

      Since youth unemployment and job-related issues are becoming the biggest challenges in this time, we think that we need to haste to increase the number of U-Turn companies by strengthening the supports in the law.

     

       First of all, we think that it is necessary to enhance the incentives for U-turn companies by including the national capital region in the U-Turn support area, or to include not only manufacturing industries but also the service industries with high employment inducement effect in the list of the industries of the U-Turn companies. 

     

      We also recommend improving the support details considering the situation of the companies in reality such as extending the benefit duration of the employment subsidy from the existing one year to two years.

     

     

    5. Expanded Application of Interest Calculation Standard and Expansion of Uses When Transferring Industrial Land

     

    When transferring industrial land such as industrial facility areas, the interest shall be determined based on Article 52 of the‘Industrial Cluster Development and Factory Establishment Act’.

     

      According to the above, the interest* is calculated by multiplying the acquired price by the total producer price index during the period from the acquisition date to the transfer date,

     

         * Acquired Price × Producer Price Index [(Price Index in the Month of  Transfer - Price Index in the Month of Acquisition) / Price Index in the Month of Acquisition]

     

      If the total producer price index on the date acquisition is higher than the index at the time of transfer, there will be no interest and the transfer price will be lowered. Then, it will result in the loss of tenant companies. Therefore, we would like to recommend improving the Enforcement Decree of the Industrial Cluster Development and Factory Establishment Act so that other reasonable price variables such as consumer price index could be reflected instead of the total producer price index.

     

      In addition, in accordance with Article 2, Subparagraph 18 of the ‘Industrial Cluster Development and Factory Establishment Act’, and Article 6, Paragraph 5, Subparagraph 3 of the Enforcement Decree of the same Act, the logistics facilities that purchase and sell goods directly are not allowed to move into the industrial complexes.

     

     Therefore, we recommend resolving the related regulations by comprehensively applying the meaning of the business of establishment and operation of logistic facilities in the Enforcement Decree of the same Act to the direct logistics activities utilizing their own products.

     

    6. Improvement of system related to reducing workweek (flexible working hours, discretionary working hour system, etc.)

     

     

      The production environment and working conditions vary depending on the characteristics of industry and business of the company. In addition, small and medium-sized companies that supply to large corporations are bound to experience a great deal of production volume differences depending on the economic situation.

     

      In the case of our company that manufacture the semiconductor-related equipments also experiences the fluctuation in orders due to the high variability of the market itself. Therefore, our working hours are very flexible.

     

      In particular, equipment maintenance and R & D jobs have the characteristics that their work is concentrated during the periods of initial stage of development and post-delivery evaluation, as there are many requests from the company who placed the order. At this time, not only researchers but also service engineers have intensive workload.

     

      Shortening the working hours without taking into consideration the characteristics of each industry will bring great difficulties in the management of small and medium-sized companies.

     

      In light of this, we would like to propose the introduction of the annual workweek system and the expansion of jobs that are subject to discretionary work under the Labor Standards Act.

     

      Specifically, please allow to operate the flexible working system every six-month or one-year basis, changing from the current unit of two-week or three-month. 

     

      We propose to extend the jobs that are subject to the discretionary working hours to the emergency responding jobs to the company who made orders and the managing jobs and research assistants from the some limited R&D jobs.

     

    7. Supports for Utilization of Financing for Development

     

     

      Our company is working on to obtain business rights of overseas infrastructure projects in many countries in Asia and Africa, and most of the contracting governments request the business operator to be responsible for funding.

     

      Korean companies are experiencing difficulties in winning project orders as the competitors from the developed countries and China advertising extremely low-interest fund and long-term redemption financing conditions.

     

      In recent years, the Korean government has been actively supporting Korean companies' entry into the overseas infrastructure market by establishing ‘Financing for Development’, which is a combination of the export financing and Economic Development Cooperation Fund.

     

     However, the fund provides financial support only for the companies selected through international competitive bidding and it is difficult to ensure that Korean companies will be beneficiaries.

     

     Therefore, it would be a great help for Korean companies to win overseas infrastructure projects if you could relax the requirements for the Financing for Development so that the fund could be utilized for the projects developed exclusively by Korean companies without going through international competitive bidding.

     

     

     

     

     

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