K-Sure, Provides 1 Trillion Won in Funding to Overseas Subsidiaries Hit Directly by Tariffs and Middle East War

K-Sure, Provides 1 Trillion Won in Funding to Overseas Subsidiaries Hit Directly by Tariffs and Middle East War

Guidelines Revised to Increase Total Support Limit from $300 Million to $800 Million

The government has significantly increased the scale of management fund support for overseas local corporations of Korean companies, which have seen increased business uncertainty due to US tariff barriers and the Middle East war, from the existing $300 million (approximately KRW 447.4 billion) to $800 million (approximately KRW 1.1932 trillion).

According to the government on the 12th, the Korea Trade Insurance Corporation (K-Sure), after consultation with the Ministry of Trade, Industry and Energy, completed the revision of the 'Special Support Measures for Operating Funds of Overseas Local Corporations to Respond to US Tariffs and Stabilize Overseas Supply Chains' guidelines on the 30th of last month.

These guidelines were established in June last year to alleviate the management difficulties of overseas local corporations caused by US tariff imposition.

Since its introduction, K-Sure has provided a total of $210 million in operating funds to 8 small and medium-sized enterprises (SMEs) and mid-sized companies, including Nexen Tire's local production plant in the Czech Republic and Kyung Dong Navien's US local corporation.

However, with the ongoing tariff risks and the recent Middle East war, the demand for operating funds from local corporations for securing raw materials, etc., has rapidly increased.

K-Sure's analysis estimates that the demand for support for local corporations this year will reach $380 million, making it impossible to meet with the existing $300 million limit.

Accordingly, K-Sure has raised the total support limit from the existing $300 million to $800 million through the revision of the guidelines. This figure reflects $200 million for existing effective contracts, $400 million for anticipated support demand, and $200 million for a reserve limit.

The eligibility threshold for support has also been significantly lowered.

Previously, the limit was set as the lesser of 30% of sales or twice the equity capital, but to address the issue of sales corporations with weak capital being excluded from support, if there is a payment guarantee from the domestic parent company, they can receive support up to 30% of sales regardless of the capital size.

Furthermore, for small and medium-sized partner companies that have advanced overseas with large corporations, the limit will be preferentially applied up to 50% of sales.

In addition, K-Sure changed the guideline name from 'Response to US Tariffs' to 'Response to International Geopolitical Changes' to enable comprehensive responses to overall international situations beyond tariff measures of specific countries.

Along with this, regulations have been streamlined to prevent operational confusion on the ground, including the deletion of preferential treatment for domestic banks in relation to the 'Operating Guidelines for Special Products of Overseas Project Finance Insurance Exclusively for Domestic Banks,' which came into effect in April.