The trade insurance fund, which was previously accessible only to the government and banks, will now also allow local governments and corporations to contribute funds. If local governments contribute to the fund, the Korea Trade Insurance Corporation (K-SURE) is expected to offer new programs, including specialized trade insurance for industrial complexes within the jurisdiction of the respective local government. From K-SURE's perspective, the diversification of funding sources for contributions is anticipated to enable more stable support for trade financing.
According to the government on the 21st, the Ministry of Trade, Industry and Energy recently announced a legislative notice regarding partial amendments to the enforcement ordinance of the 'Trade Insurance Act.' The main point of the amendment is to add local governments and corporations to the institutions that can contribute to the trade insurance fund.
The trade insurance fund is a resource established to support export and import corporations or businesses seeking to expand overseas, managed by the Korea Trade Insurance Corporation. It serves to protect against various risks, such as the non-recovery of export payments and exchange rate fluctuations, thereby assisting corporations in their overseas ventures.
Other government policy financing institutions apart from the Korea Trade Insurance Corporation include the Credit Guarantee Fund and the Technology Guarantee Fund. These two funds aim to enhance financial accessibility for low-credit corporations and support funding for technology-based corporations, respectively. However, unlike the two funds where corporations or local governments can contribute, only the government and banks could contribute to the trade insurance fund.
A government official noted, "All three funds could have local governments and corporations contribute until 2016 due to regulations stating that 'other contributing institutions shall be determined by presidential decree.' However, that year, the National Assembly pointed out that only the trade guarantee fund must have its 'contributing institutions clearly specified,'" he explained. He added, "Subsequently, it was specified that only the government and financial institutions could contribute to the trade guarantee fund, with the intent to add other contributing institutions as necessary."
According to the Ministry of Trade, Industry and Energy, local governments and corporations have communicated their demand for contributions to the trade insurance fund to the government last year. They can receive specialized trade insurance programs tailored to regional and industry-specific demands. If local governments actually contribute to the fund, the Korea Trade Insurance Corporation is expected to provide specialized trade insurance for the contributions.
A government official stated, "If large corporations and local governments contribute to the trade insurance fund, the Korea Trade Insurance Corporation can establish trade insurance programs for vendor corporations related to those large corporations or for companies within the jurisdiction of the respective local government, thereby providing benefits. This amendment lays the groundwork for that purpose."
Previously, on the 18th, the government announced the 'comprehensive emergency export measures' that provide trade financing amounting to 366 trillion won, the largest in history. The scale of trade insurance support for small and medium-sized enterprises in exports has been set at 100 trillion won. This amendment is expected to contribute to stable trade financing support through the diversification of contributing institutions.
However, a Ministry of Trade, Industry and Energy official remarked, "This amendment is unrelated to the emergency export measures," while noting, "There will be an effect of increasing the overall size of the trade insurance fund."