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Choo calls for midsized firms’ proactive investment amid challenges

June 26, 2023

South Korea’s finance minister called Monday for local medium-sized companies to invest in a proactive manner by utilizing tax incentives to help the country address economic challenges.

“The economic growth (of South Korea) has been sluggish amid weak exports,” Finance Minister Choo Kyung-ho said during a meeting with officials from medium-sized businesses.

“Despite our substantial trade relations with China, the anticipated impact of its reopening has been delayed, leaving the timeline for when these effects will become visible uncertain,” he added, noting the semiconductor industry also remains lackluster.

In May, South Korea’s overall exports fell for the eighth consecutive month, plunging 15.2 percent on-year to US$52.24 billion. The decline came as exports of semiconductors sank 36.2 percent on falling global demand.

Finance Minister Choo Kyung-ho (2nd L) participates in a meeting in Seoul with officials from medium-sized firms on June 26, 2023. (Yonhap)

Over the first 20 days of June, shipments to China, South Korea’s top trading partner, fell 12.5 percent to $6.67 billion.

Amid such circumstances, Choo noted that South Korea’s inflation has been showing signs of deceleration, with job market indicators also delivering positive signals.

Consumer prices, a key gauge of inflation, rose 3.3 percent in May from a year earlier, compared with a 3.7 percent on-year advance in April, according to a recent report from Statistics Korea. The latest figure marked the lowest level since the 3.2 percent growth tallied in October 2021.

Choo added the government is committed to revitalizing the economy by further reducing barriers for local businesses.

The government will especially spare no efforts to help medium-sized companies adapt to global trends, such as supply chain reshuffles, as well as the green and digital transitions.

“This year, the government has been rolling out various supports in terms of tax incentives to promote companies’ investment,” Choo said. “If the businesses leverage such incentives and roll out investment, it will be a significant help in revitalizing the economy.”