KCCI Proposes Large-Scale Supplementary Budget Expansion to Government for COVID-19 Recovery

Request for Large Supplementary Budget Expansion, Base Interest Rate Cut, Financial Support for Mid-sized Companies, and Resolution of Operational Resumption Difficulties
Includes Detailed Proposals by Industry Sector

[Asia Economy Reporter Ki-min Lee] The Korea Chamber of Commerce and Industry (KCCI) has gathered the positions of the industrial sector, which is suffering widespread damage due to the novel coronavirus infection (COVID-19), and submitted recommendations to the government. The KCCI's proposal includes measures such as a large-scale supplementary budget, interest rate cuts, and temporary investment tax credits.

On the 12th, the KCCI announced that it had submitted to the government the "Measures to Overcome the Economic Impact of COVID-19," which contains 30 tasks across eight major areas, reflecting opinions from nationwide chambers of commerce, key member companies, and experts. The KCCI explained, "Facing an unprecedented situation due to COVID-19, the industrial sector is experiencing widespread damage. Although the government is quickly implementing countermeasures, it is still difficult for companies on the ground to feel the effects," adding, "To reverse the worsening atmosphere and trend caused by COVID-19, extraordinary measures such as significantly increasing the supplementary budget are necessary." It also added, "Financial support is not functioning properly at the pipeline (support channels), so the blocked parts need to be cleared."

The KCCI first pointed out that the supplementary budget plan, set at 11.7 trillion won, is grossly insufficient to support the widespread damage occurring in the industrial sector. The KCCI stated, "The current supplementary budget's effect on preventing the decline in growth rate is only 0.2%, which is far below the 28.4 trillion won supplementary budget during the 2009 economic crisis," and urged, "To respond to the 1 percentage point decline scenario predicted by the market, the ruling and opposition parties should actively consider and reflect a large-scale supplementary budget during the National Assembly discussions."

The KCCI also criticized that the support measures announced by the central government are not being received in a timely manner due to issues such as 'exceeding loan limits,' 'lack of credit or collateral,' and 'difficulty in confirming sharp sales declines.' The KCCI criticized, "Local governments have announced financial support measures, but there have been cases where personal guarantees were required at regional credit guarantee foundation counters." Regarding this, the KCCI said, "At frontline counters, there is a lack of awareness of the emergency situation, and existing complicated procedures and strict requirements are being followed as is," and requested ▲ exemption from financial supervisory disadvantages for support results of COVID-19 affected companies ▲ support measures for companies excluded from primary financial institutions ▲ additional contributions from Korea Credit Guarantee Fund and Korea Technology Finance Corporation to expand financial guarantee capacity ▲ establishment and implementation of audit principles by the Board of Audit and Inspection for passive administration by public officials who fail to take proactive actions despite being able to do so.

The KCCI further emphasized operational difficulties, stating, "Many companies find it difficult to meet work volume under the 52-hour workweek system when there are absences due to workers' self-quarantine or when operations (business) resume after facility closures," and said, "It is necessary to actively approve special extended work hours for these companies." It also requested expanding the unit period of the flexible working hours system from the current three months to six months to prepare for a surge in workload due to the prolonged COVID-19 situation or post-crisis business normalization.

The KCCI included industry-specific recommendations in the proposal, noting that various problems are occurring in mid-sized companies, distribution, aviation, shipping, construction, and petrochemical industries.

As countermeasures for the normal growth of companies, the KCCI proposed ▲ lowering the base interest rate by the Bank of Korea ▲ designating temporary holidays ▲ temporary revival of the investment tax credit system ▲ legislation to revitalize the service industry. The KCCI emphasized the need for a prompt interest rate cut, stating, "Even though the U.S. Federal Reserve has sharply cut rates by 0.5 percentage points, if interest rates are not lowered, it will fail to send a policy will and signal for economic recovery to the market." It also noted, "This year, holidays are 115 days, two days fewer than last year, the fewest in the past five years," and said, "If weekdays that can create long weekends are designated as temporary holidays, the government's existing domestic demand stimulus measures could have a greater effect," but added, "This matter should be judged while monitoring the COVID-19 containment situation."

It continued, "Due to COVID-19, corporate investment contraction has intensified," and recommended, "It is desirable to temporarily operate the temporary investment tax credit system, which applies a 10% tax credit rate to all business facility investments for both large and small-medium enterprises, for the next three years."

Furthermore, the KCCI raised its voice to revitalize the service industry, which has suffered the greatest damage from COVID-19. The proposal includes contents such as 'expansion of telemedicine, which is effective in infectious disease response and has growth potential,' 'expansion of data use for public purposes such as disaster response,' and 'legislation and implementation of the Service Industry Development Act.'

Woo Tae-hee, head of the KCCI COVID-19 Task Force (Executive Vice President), said, "The economic shock of COVID-19 is very broad, severe, and prolonged," and urged all sectors to respond, saying, "It is time for the Bank of Korea to cut interest rates, the government to revive the investment tax credit, and the National Assembly to expand the supplementary budget, with swift and maximum support to overcome corporate management difficulties and to get the stalled economy moving vigorously again."

This content was produced with the assistance of AI translation services.