Seosan City and Pohang City Designated as Industrial Crisis Preemptive Response Areas

[Financial News] Amidst global oversupply and increased uncertainty in the trade environment, the domestic petrochemical and steel industries are facing significant difficulties. The government has designated Seosan City and Pohang City, which are heavily affected by the petrochemical and steel economies, as industrial crisis preemptive response areas. 
 The Ministry of Trade, Industry and Energy announced on the 28th that it held a government industrial crisis response committee meeting and designated Seosan City and Pohang City as industrial crisis preemptive response areas for two years from today until August 27, 2027.
 Last month, Seosan City applied for designation as an industrial crisis preemptive response area, judging that the deterioration of the petrochemical industry was concerning, while Pohang City was concerned about the significant deterioration of the steel industry. 
 In the case of Seosan City, this is the second designation as an industrial crisis preemptive response area following Yeosu City due to the petrochemical industry crisis.
 With the designation of Seosan City and Pohang City as industrial crisis preemptive response areas, the government will prioritize emergency management stabilization funds, local investment promotion subsidies, and strengthen policy financial support for small and medium-sized enterprises.
 The emergency management stabilization fund provides loans with a limit of 1 billion won at an interest rate of 3.71% with a two-year grace period and a five-year maturity through the Small and Medium Business Corporation. The Small Business Market Promotion Corporation also provides loans with a limit of 70 million won at an interest rate of 2.68% with a two-year grace period and a five-year maturity.
 The local investment promotion subsidy ratio is also increased from the existing 4-9% to 12% for large enterprise facility investments. For small and medium-sized enterprise facility investments, it is increased from 8-15% to 25%.
 Policy financial institutions will support maturity extensions and repayment deferrals for small and medium-sized enterprises, and the Credit Guarantee Fund and Technology Guarantee Fund will launch preferential guarantee support programs for partner companies and small business owners. In addition, if there is no intentional or gross negligence, the person in charge will be exempted to actively support by policy financial institutions.
 In addition, through the regional industrial crisis response project newly established in the second supplementary budget, additional support will be provided for interest compensation to reduce the burden on loans related to the main industries located in the industrial crisis areas, and customized support (corporate support, human resource development) to strengthen corporate competitiveness.
 First, small and medium-sized enterprises engaged in the main industries such as petrochemicals or steel in Seosan and Pohang, or closely related upstream and downstream industries, can receive interest compensation of 3 percentage points within a limit of 500 million won when receiving new loans from interest compensation handling financial institutions. For example, if a loan is taken at an interest rate of 5%, only 2% needs to be self-borne. The handling financial institutions selected are Kookmin Bank, Industrial Bank, Nonghyup Bank, Busan Bank, Shinhan Bank, Woori Bank, and Hana Bank. Customized support is provided by selecting implementing agencies within the crisis area to meet the needs of companies. The dedicated agency is the Korea Institute for Advancement of Technology (KIAT).  
 The Ministry of Industry stated, "We plan to actively reflect various support projects necessary for overcoming the industrial crisis, such as research and development, management consulting, and employment stability, in the budget after 2026." 
aber@fnnews.com Park Ji-young Reporter