Posted on 13 Jul 2016
Concerns about a deepening economic slump due to the Brexit and worldwide moves for protectionism are fueling the deterioration of economic conditions, but the economy’s badly affected parts are nearly neglected. This is why Yoo Il-ho, deputy prime minister and minister of strategy and finance brought up the restructuring of industries oversupplying products once again on July 12.
Up to the present, industry experts have said that such restructuring will begin in August. This is because the assessment of big companies’ credit by financial authorities will be completed at the end of this month and the Special Act on Revitalizing Companies will take effect in the middle of August. In addition, August will see the release of consulting reports about industries oversupplying products. These three tools will empower the government to directly and indirectly put pressure on companies for restructuring.
The assessment of big companies’ credit, which began early May, will be completed sooner or later. In particular, it has been known that the government is giving strong penalties not only to the shipbuilding and shipping industries, core targets of restructuring but to vulnerable industries such as the petrochemical, steel and construction industries.
In August, consulting reports about industries glutting the market will come out one after another. In the case of shipbuilding, the government is even reviewing a plan to give grades by vessel types and block the third or lower rankers from receiving refund guarantees (RGs) in a bid to encourage companies to specialize and differentiate themselves. Among the industries glutting the market, the shipbuilding industry is in the most serious situation so it is highly likely that the government’s ideas will be applied to consulting contents anyway.
Some say that the steel and petrochemical industries are now out of the woods. But a diagnosis says that in reverse, it is high time to restructure the steel and petrochemical industries. In the case of steel, M&As are giving birth to big steel firms in China and Japan. But in Korea, the plan to sell off Dongbu Steel, the first restructuring target, has not make any progress and is not showing any sign of an improvement. It is also predicted that the Special Act on Revitalizing Companies will be applied to a steel company as the steel industry needs to specialize products and reduce redundant facilities and has better conditions for restructuring than other industries.
The petrochemical sector is also studying the pleasure of the government while using their performances as a cover. But as their performance improvements were driven by the widened gap between raw material prices and product prices, a superior opinion is that revamping them is urgent.
On this context, “We will draw up a plan to boost the competitiveness of industries by type including steel this September,” said Joo Young-hwan, minister of industry, trade and resources at the general meeting of the National Assembly’s Special Committee on Budget and Accounts.
