The government has reached a tentative conclusion that it is difficult to designate petrochemical industry clusters such as Yeosu, Seosan, and Pohang as "special industrial crisis response zones," according to reports on the 23rd. Officials said the areas do not meet the legal criteria, including declines in employment and rising business suspension and closure rates.
The industrial crisis zone system was introduced in 2018. It is a two-step structure that first designates areas showing early signs of crisis as preemptive response zones to support short-term stabilization, and if the crisis intensifies, upgrades them to special response zones to provide stronger support such as tax cuts, higher state subsidies, and regulatory exceptions. Preemptive response zones use relatively limited tools such as operating fund support, employment stabilization, and reemployment assistance.
After the Middle East crisis broke out, the petrochemical sector deteriorated further, and local communities and political circles have called for stronger support for petrochemical regions. In response, the ruling party and the government said last month they would push to upgrade the areas to special response zones and strengthen support for preemptive response zones.
However, the Ministry of Trade, Industry and Resources believes Yeosu, Seosan, and Pohang do not meet the designation requirements. To be designated as a special response zone, the core industry's number of employees and output in the area must have decreased by at least 10% compared with one or two years earlier, and the area must separately meet conditions indicating an economic slump, such as an overall employment decline of 5% or more and an increase in business suspension and closure rates in commercial districts.
Even on employment alone, these areas do not meet the criteria. According to the Ministry of Data and Statistics (MODS), in the second half of last year, employment in Yeosu fell 3.4% from a year earlier, while Seosan and Pohang actually increased. An official at the Ministry of Trade and Industry (MOTI) said, "The designation criteria are clearly stipulated by law, so applications can only be made if they meet those standards."
Support for preemptive response zones is also unlikely to change much. The additions through the recent supplementary budget consist solely of 7 billion won in high value-added transition technology consulting and training for incumbent workers. Items sought by local corporations, such as 120 billion won in electricity bill reductions, were left out. Separately, however, the Ministry of Trade and Industry (MOTI) is proceeding with procedures to designate Ulsan, another petrochemical region, and Dangjin, a steel region, as preemptive response zones.