Review conducted in writing as Industry Minister Kim Jung-kwan was on overseas trip; designated firms to receive loan relief, emergency stabilization funds

Industry Minister Kim Jung-kwan visits the SK Energy factory in Ulsan — the lead factory of the petrochemical AX demonstration complex project — on May 13 to receive a briefing from officials. [Ministry of Trade, Industry and Energy]
Industry Minister Kim Jung-kwan visits the SK Energy factory in Ulsan — the lead factory of the petrochemical AX demonstration complex project — on May 13 to receive a briefing from officials. [Ministry of Trade, Industry and Energy]

The government has designated Ulsan's Nam-gu and Dangjin in South Chungcheong Province — home to a petrochemical complex and a steel complex, respectively — as preemptive industrial crisis zones, as both areas struggle with a supply glut driven by China.

The Ministry of Trade, Industry and Energy announced Monday that it held a written session of the Industrial Crisis Response Deliberation Committee and formally designated Nam-gu and Dangjin as preemptive industrial crisis zones for two years through June 14, 2028.

The review was conducted in writing because committee chair Kim Jung-kwan, who also serves as industry minister, was on an overseas trip.

The preemptive industrial crisis zone regime allows the government to designate areas where a dominant industry faces a sharp deterioration before a full-blown crisis sets in, providing support to help companies in that industry weather the downturn and minimize the economic shock to the region.

Nam-gu applied to the ministry in March for the designation, citing structural pressures on the petrochemical industry including the Middle East war, naphtha supply instability and business restructuring. Dangjin applied the same month, citing difficulties in the steel industry stemming from a global supply glut and rising low-cost imports.

The petrochemical industry accounts for more than 40 percent of manufacturing output in Nam-gu, while the steel industry makes up more than 57 percent in Dangjin — leaving both local economies highly exposed to downturns in their dominant sectors.

The government reviewed application requirements, conducted on-site inspections, consulted related ministries and local governments, and carried out in-depth expert assessments under the procedures set out in the Regional Industrial Crisis Response Act before granting the designations. With the two additions, the total number of designated zones now stands at six, following Yeosu, Seosan, Pohang and Gwangyang.

Companies operating in the dominant industries within preemptive industrial crisis zones will be eligible for interest-rate subsidy programs to ease their loan burden, as well as tailored support measures including business assistance and workforce development.

Companies already located in the designated areas, or those making new investments there, will also receive preferential access to emergency management stabilization funds and regional investment promotion subsidies. Additional support to help the local economy recover will include maturity extensions and repayment deferrals for small and medium-sized enterprises through policy finance institutions, and preferential guarantees for partner firms through the Korea Credit Guarantee Fund and the Korea Technology Finance Corp.

The ministry said it plans to help Nam-gu and Dangjin recover quickly over their two-year designation period by moving swiftly to implement government support programs and securing the necessary budget allocations.


oskymoon@heraldcorp.com