S. Korea to support smaller exporters hit by Japan quake

March 22, 2011 10:31 am 

SEOUL, March 22 — South Korea will provide financial support to local smaller companies doing business with firms in Japan in a bid to ease a potential liquidity crunch following the powerful quake that hit the neighboring country, a state-run agency said Tuesday.

The Small and Medium Business Administration (SMBA) said it will grant emergency financial aid of 130 billion won (US$ 117 million) to smaller exporters, which will help them secure liquidity amid concerns that their exports to Japan may drop on production disruptions in the island country after the strongest earthquake in the nation's recorded history.

The SMBA said their loan maturity will be extended, and spreads charged on loans used for operating funds will be cut as well.

The move comes as local smaller firms could face a potential cash shortage due to disruptions in their business partners' production in Japan.

Japan was struck on March 11 by the 9-magnitude temblor that shook houses and buildings across Tokyo and unleashed a 10-meter-high tsunami that engulfed towns on the northern coast.

Local banks are also backing smaller firms feeling the pinch from the Japanese quake.

Kookmin Bank said earlier it will allow smaller firms in question to roll over maturing loans without repaying part of the principal.

The state-run Industrial Bank of Korea also plans to offer a maximum of 300 million won ($ 263,000) in emergency funds to such smaller firms.

According to the Korea Trade-Investment Promotion Agency (KOTRA), the quake is expected to impact Korea's imports of components from Japan, which account for about 25 percent of its total component imports.

Last year, South Korea imported components worth $ 38.1 billion from the neighboring country. The quake is likely to heavily influence components used for electronic goods and petrochemical products, KOTRA said. (PNA/Yonhap)

LDV/ebp

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