The South Korean government has earmarked record 1.07 trillion won ($894.4 million) in 2020 budget specifically to back exports, the backbone of the economy that has been slumping by double digits in recent months.

The Ministry of Trade, Industry and Energy unveiled the plan during its meeting with the Korea International Trade Association on Friday. It would be the first time ever for the country to spend over 1 trillion won solely on supporting exports. The Korean government sought supplementary budgeting 116.8 billion won in July to prop up sagging exports.

The spending will largely be used on exploring new markets to increase demand.

More specifically, it will divide the export market into three sectors – strategic, emerging, and key – and offer supports tailored to their specific needs.

To back the growth in exports to strategic markets - Southeast Asia and Eurasia, the government plans to capitalize on the popularity of Korean pop culture in the regions with a goal to raise their share within the country’s total exports by more than 30 percent.

In the emerging markets, including Latin America and the Middle East, the Korean government will focus on expanding state-backed projects such as official development assistance programs.

The Korean government will also work to improve its trade position in its key markets like the U.S., China, Japan, and Europe by diversifying export items as well as expanding high-end segments to guard against potential risks.

As for the high-tech materials and equipment vulnerable to Japanese trade embargo, the Korean government will support research and development projects as well as mergers and acquisition deals abroad. The ministry said it will provide over 2.5 trillion won in M&A funds and tax supports to help Korean companies secure related technology from abroad.

The government will also stretch trade insurance balance by 3.7 trillion won next year. It will spend 1 trillion won to back large-scale export projects like infrastructure development project in Iraq, 2 billion won to help small and medium-sized exporters make inroads into new markets, and 300 billion won on securing materials, electronic parts, and equipment suppliers other than Japanese.

In addition, it plans to expand its marketing supports to local exporters to 6,500 companies next year from this year’s 5,800.

By Lim Sung-hyun and Cho Jeehyun

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