Hong Nam-ki (right), the minister of economy and finance, receives a briefing from an official at a SK Innovation plant in Ulsan on June 13, 2019. [Photo provided by the Ministry of Economy and Finance]
The South Korean government on Thursday is reviewing additional tax support to petrochemical companies facing multiple hardships from the U.S.’s resumed sanctions on Iran and intensifying trade war between the U.S. and China.
Hong Nam-ki, deputy prime minister for economy and economy and finance minister, said on Thursday that the petrochemical industry is one of Korea’s backbone industries that brings up to 2.5 times more synergy effect compared to other industries such as automobile and shipbuilding. The government is strongly determined to support the industry, he said.
Hong’s remarks were made during his visit to SK Innovation Co.’s Ulsan Complex (CLX) and Ulsan Free Trade Zone Office, where he met officials from a number of local petrochemical companies.
In a meeting with Hong, industry officials asked the government to help them secure facility sites and industrial water, give tax benefits for research and development and facility investment, and tax breaks on productivity improvement, expand unit period for flexible working hour system, and allow more flexibility in setting a permissible range of special overtime work.
Hong said the government is seeking to provide the utmost support to the local petrochemical industry that will invest 14.5 trillion won ($12.3 billion) in various projects by 2023.
SK Innovation Co.’s Ulsan Complex (CLX)
According to Korea Petrochemical Industry Association, the petrochemical sector will invest a total 26.2 trillion won at home and abroad by 2023 to renovate and replace aging petrochemical facilities and related infrastructure. It will invest 15.6 trillion won in Korea, which includes 2018 amount, and 10.6 trillion own overseas.
Hong said the government acknowledges the petrochemical industry is facing even more trouble in the wake of the intensifying trade war between the U.S. and China and the end of waiver for Korea on U.S. Iranian oil sanctions, and it has been seeking to find solutions by forming a taskforce consisting of officials from related ministries.
Hong also said the government’s economy policy direction for the second half of this year scheduled for announcement later this month will include measures to support the petrochemical industry.
“We are currently in discussion with Korea Water Resources Corporation, Korea Rural Community Corporation, and Ministry of Land, Infrastructure and Transport as companies have complained hardships in securing land and industrial water for production,” Hong said, adding much progress has been made so far.
By Lim Sung-hyun and Lee Eun-joo
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