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`Smaller Companies to Get Financial Assistance`

Posted September. 24, 2008 08:59,   


Knowledge Economy Minister Lee Youn-ho said yesterday that the government is considering giving more financial assistance to small and medium-size companies in the wake of the U.S. financial crisis.

In an exclusive interview with The Dong-A Ilbo at his office in the southern Seoul suburb of Gwacheon, Lee also said, “The financial crisis has put a heavier burden on smaller companies already suffering from liquidity problems.”

Worry has grown that more smaller companies will go bankrupt even when they generate profits, as a growing number of exporters who have bought “knock-in, knock-out (KIKO)” currency options have suffered ballooning losses due to a drop in the won’s value against the U.S. dollar.

Lee said, “The government has asked financial authorities and institutions not to tighten the money market to prevent small businesses from going under due to financial difficulties. In worse cases, the government will urge financial institutions to provide special loans to smaller companies.”

On the plan to increase gas and electricity prices, he said, “Since the government has more processes to go through, it is still not decided how much the rates will rise. However, we will follow the three principles of minimizing the rise in gas and electricity bills; increasing each utility bill at different times; and freezing utility bills for low-income brackets.”

Lee also mentioned new growth engines, saying, “The private sector has played a leading role in formulating strategies to nurture new growth engines while considering the possibility of success, ripple effects, job creation and the mutual prosperity of large and smaller corporations. Business is also critical in supporting President Lee Myung-bak’s ‘green growth’ policies.”

The minister also expressed worry over Korea’s worsening trade balance. Many experts say higher oil prices will result in the country’s highest trade deficit in 11 years.

“Before the tsunami of the financial crisis swept through the nation, Korea was expected to maintain trade equilibrium in September and return to the black at the end of this year,” Lee said.

“The amount of Korea’s accumulated deficits is expected to fall by the end of this year, but the government is paying keen attention since the aftermath of the (U.S.) financial crisis is still affecting the Korean economy.”

sckim007@donga.com cha@donga.com