[Photo by Korea Exchange]

South Korea is seeking to ease the initial public offering process for local component and material makers as part of its latest efforts to accelerate tech self-sufficiency amid the trade spat with Japan.

Under the new rules, effective on Sept. 9, the review period for the IPO of local component and material firms will be shortened to 30 days, compared to 45 days for other companies, Korea Exchange said.

The move is a follow-up to the government’s initiative announced last month to bolster the country’s competitiveness in components, materials and equipment in the face of Tokyo’s trade restrictions.

Korean President Moon Jae-in vowed to go all out to localize key industrial items after Japan in July curbed exports of three chemicals needed for the production of Korea’s vital semiconductor and display panel sectors. The conflict stemmed from a diplomatic row over wartime forced laborers during Japan’s colonial occupation over Korea.

Japan holds considerable sway over Korea as a major supplier of key materials and components. Nearly 68 percent of Korea’s imports from Japan last year consisted of materials, parts and equipment items, according to the trade ministry. Korea has never once recorded a trade surplus with Japan since the two countries normalized ties in 1965.

Last week, Korea announced plans to invest 5 trillion won ($4.12 billion) in research and development for core components and materials over the next three years, starting with a 1-trillion-won backing this year.

The eased IPO rules would apply to companies primarily engaged in the manufacturing of materials, parts or equipment whose production is responsible for more than half of their total revenue. The benefits would mostly be extended to small and midsized enterprises but large companies could also qualify if their component-making subsidiaries account for less than 50 percent of total sales.

To expedite the assessment process, five review agencies would be added on top of the 13 existing ones.

The government has also eased the evaluation threshold. To qualify for an IPO, companies now only need to attain a grade of A or higher from at least one organization, as opposed to previous occasions when they had to gain an A or BBB grade from at least two agencies.

By Chung Seung-hwan and Kim Hyo-jin

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]