Amid growing uncertainty in the trade environment due to the new U.S. administration's inauguration this year, the government will launch the largest trade finance support in history, amounting to 360 trillion won. Additionally, export financial support is planned to be executed at an all-time high of 2.9 trillion won. This initiative aims to support export diversification to ensure that domestic corporations are not impacted by changes in the trade environment.
To minimize damages to small and medium-sized corporations from the shock of the won-dollar exchange rate reaching its highest point since the financial crisis, support for exchange rate fluctuation insurance will be strengthened. The support scale will be expanded from 1.2 trillion won to 1.4 trillion won, and the increase in the insurance limit per corporation (maximum 100%→maximum 150%), which was until the end of last year, will be extended until June this year.
◇ comprehensive support for export portfolio diversification
According to the '2025 Economic Policy Direction' announced at the expanded economic ministerial meeting chaired by Prime Minister and Minister of the Ministry of Strategy and Finance Choi Sang-mok on the 2nd, the scale of trade finance support for export corporations has increased from 355 trillion won last year to 360 trillion won this year. Based on the largest trade finance in history, specialized programs for export diversification, backbone industry support, and more will be expanded.
In terms of export diversification, financial incentives will be provided when expanding export items to new industries such as Artificial Intelligence (AI) and bio and when expanding export regions to Global South countries. The scope of countries to which the 'Advance Finance System' applies will also be broadened. The Advance Finance System is a trade insurance system that provides funds in advance to overseas clients to help our corporations actively participate in overseas projects. Comprehensive packages will also be prepared to support corporations affected by export damages in major markets like the U.S. and China in finding new buyers, including credit investigation and prompt compensation.
Regarding backbone industries, funds will be provided or financial incentives will be offered for research and development (R&D), mergers and acquisitions, and business restructuring. A preferred production funding guarantee will be established for suppliers of large export corporations like automobiles. Additionally, the government will actively participate in policy finance for eco-friendly institutional sectors such as domestic offshore wind and hydrogen energy. Policy financial incentives will be given to corporations pursuing a transition to and enhancement of low-carbon products. Customized trade insurance review methods will also be introduced, such as establishing exclusive special contracts for secondary battery corporations in the energy storage system (ESS) field.
The government has set the support scale for mega-scale order special programs, including infrastructure, nuclear power, and defense, at 95 trillion won over five years from last year to 2028. This is an increase of 10 trillion won from the 85 trillion won for strategic order export finance support announced by the government in July last year. A government official noted, “As the export environment is expected to become difficult this year, we decided to maximize trade finance support and expand the mega-scale order special programs. We will also strengthen specialized programs for diversifying exports beyond major markets such as the U.S. and China and diversifying items.”
Fiscal and tax support will also be provided. The export support budget has been allocated at an all-time high of 2.9 trillion won this year, up from 2.1 trillion won last year. Based on this, funds for nuclear power generation, defense industry, and Content Global League will be newly established, and the Green Infrastructure Overseas Export Support Fund will be expanded. The corporation tax, value-added tax, and tax audit support package, provided to small enterprises with over 50% export ratio in total sales, will be extended by one year until the end of this year. Measures included in the package are ▲ extension of corporation tax payment deadline (3 months→6 months) ▲ early VAT refund (15 days→10 days) ▲ exclusion from regular tax investigations.
◇ 'peak after the financial crisis' focused on minimizing damage to small enterprises due to sharp exchange rate increases
Amid rapidly changing trade environment, measures to reduce damages to domestic small and medium-sized corporations are also included in the '2025 Economic Policy Direction.' The government plans to newly introduce an 'emergency liquidity supply program' in the first half of this year to timely provide liquidity to export corporations facing difficulties due to changes in trade structure. Additionally, plans to strengthen financial support for joint market entry, mutual investment expansion, and more through enhanced economic cooperation with major countries are being prepared.
In collaboration with banks, foreign-currency settlement and loan maturities will be flexibly adjusted, and financial and fiscal support will be strengthened. Specifically, the support scale for exchange rate fluctuation insurance will be expanded from 1.2 trillion won to 1.4 trillion won, and the limit expansion per corporation (maximum 100%→maximum 150%) that was until last year will continue in the first half of this year. Emergency management stabilization funds up to 1 billion won per corporation and export vouchers for insurance and guarantee subscription support up to 10 million won will be provided to support small enterprises affected by exchange rates.
A government official explained, “The reason for expanding the support scale for exchange rate fluctuation insurance and extending the limit expansion per corporation for six months is due to the increased exchange rate risk recently.”
To address logistical challenges for corporations, the expansion of joint logistics centers at major global supply chain hubs will be pursued. In addition to existing locations in the Netherlands, Spain, Indonesia, and the western United States, new emerging markets will be secured in the United States (three locations), Eastern Europe, and others. Furthermore, from this year, the public-private K Logistics Task Force (TF) will be operated to establish a 'medium to long-term logistics supply chain master plan' by the first half of the year.
Support for exports and countermeasures against counterfeit goods in sectors with a high proportion of small and medium-sized enterprises, such as cosmetics, agro-foods, and public procurement, will be strengthened. In the K-Beauty field, the safety evaluation information of natural raw materials will be expanded from 3 to 15 types, and skin and genome information from export-promising countries (currently 18 countries) will be provided for 19 countries. Regarding K-Food, plans to support entry into online Korean food malls, enhancement of agro-forestry production specialized complexes, smart farm export demonstration projects, monitoring of unauthorized preemption of K-Food trademarks, and local crackdown on counterfeit goods are in place. For innovative products in public procurement, performance and quality verification in overseas public markets and initiatives utilizing innovative products in official development assistance (ODA) will be pursued.
◇ enhancing economic security through supply chain internalization... plans for different scenarios with the new U.S. administration to be prepared
To address supply chain risks, support for production, including domestic economic security items, will be expanded. For supply chain internalization, when factories related to economic security items/services are newly established or expanded domestically, foreign investment and local investment subsidies will be increased.
Economic security-related items and services will be added to the preferential targets for foreign investment cash support, and the support rate will be increased by up to 10 percentage points (p). A supply chain support program for stabilizing the supply and demand of 'specific high-risk economic security items' will also be established. Specific high-risk economic security items refer to those that are expected to suffer significant damage in the event of a supply chain crisis but are deemed to have insufficient countermeasures.
Additionally, a plan is in place to promote investment in critical minerals through the public-private 'Core Minerals Investment Council.' A 'required fund package' consisting of information provision, consulting, loans, investments, guarantees, and more will be supported. A public-private joint venture using a 50 billion won supply chain fund will also be pursued this year. By expanding fund supply to 30 trillion won over three years and coordinating fund loans and guarantees for small and medium-sized enterprises, a 'supply chain preferential guarantee program' will be newly introduced.
In preparation for the inauguration of the second Trump administration in the U.S. on the 20th, the government is regularly holding the ‘Foreign Relations Ministers’ Meeting,’ attended by Minister-level officials from the Ministry of Strategy and Finance, Ministry of Foreign Affairs, Ministry of Trade, Industry and Energy, and the Office for Government Policy Coordination, among others. The government plans to analyze the impact of the inauguration of the new U.S. administration on industries, trade, economic security, and more, and prepare response measures for potential scenarios through this meeting this year. It also plans to promptly establish cooperative relationships with the new U.S. administration cabinet to lay the foundation for expanding mutually beneficial cooperation.
A government official noted, “In response to the expanding uncertainty in the trade environment, plans are in place to promote the expansion and enhancement of trade networks to Global South, among others,” and “We will improve free trade agreements (FTA) with major countries such as Chile, China, and the United Kingdom and accelerate follow-up negotiations.”
The government is pushing for new economic partnership agreement (EPA) negotiations with Bangladesh, Pakistan, Tanzania, and Morocco, and plans to expand the digital trade network by concluding the Korea-European Union (EU) Digital Trade Agreement.