Fisher Capital Management Investment Solutions: S. Korea set to spend 6.5 tln won on growth engines

http://fishercapitalmanagementinvestment.com/2011/04/fisher-capital-management-investment-solutions-s-korea-set-to-spend-6-5-tln-won-on-growth-engines/2011/04/14 10:20 KST
SEOUL, April 14 (Yonhap) — South Korea will provide about 6.5 trillion won (US$5.98 billion) worth of loans, guarantees and other financial support this year for domestic companies seeking to nurture the nation’s new growth engines, the finance ministry said Thursday.
The plan is part of measures that the ministry and other related government agencies reported to President Lee Myung-bak earlier in the day to better establish effective ties between funding and business activities in new growth engines.
The government has been pushing to nurture a total of 17 new growth engine businesses in green, high-tech convergence and value-added industries. New renewable energy, LED technologies, robotics, nanotechnology, biotechnology, health and software are among those businesses expected to lead the nation’s future economic growth.
According to the ministry, the Small and Medium Business Administration will provide about 1.7 trillion won this year in the forms of loans and financial support for smaller companies that have developed new technologies in those cited areas.
About 1.3 trillion won worth of loans will also be provided by the state-run Korea Finance Corp through private banks. Under the so-called “on-lending” system, the corporation will grant a mid-term loan to private banks, which will in turn lend money to promising companies by using the government support, the ministry said.
The state-run Korea Technology Guarantee Corp., known as the KIBO, seeks to offer 3 trillion won worth of loan guarantees for businesses. The loan guarantee will be given based on its assessment of technologies and future growth potential of individual companies.
The corporation will also plan to issue about 300 billion won worth of primary collateralized bond obligations this year in order to expand its financial support for green and tech start-ups, the ministry added.
“We expect the latest measures will help strengthen the ties between the financing process and real ongoing business activities in new growth engine categories,” the ministry said. “In particular, they will likely boost financial support tailored to new growth engines which tend to be high-risk and need longer-term help in the nature of their work.”