Export support package

Regaining manufacturing competitiveness holds the key

The government has hurriedly come up with a policy package to revitalize exports, which fell for the third consecutive month in February amid a slowdown of the global economy.

The package calls for increasing export financing and helping to ease the cash crunch at exporting companies. The expanded subsidies are sure to help exporters, but it is far from assured they can reverse the declining trend in overseas shipments. This is because the aggravating global trade environment and having to rapidly chase Chinese competitors are combining to weaken Korea's manufacturing competitiveness.

At a meeting presided over by Minister of Economy and Finance Hong Namki, Monday, the government decided to expand export financing to 235 trillion won ($208 billion), up 15.3 trillion won from last year. It will also introduce a special credit guarantee system valued at 100 billion won, and help exporters cash in export bonds worth 1.3 trillion won. These steps will be of considerable help to exporters reeling under shipment slumps amid falling semiconductor prices and adverse external factors.

Given that foreign shipments prepped up economic growth last year, the export downslide means the economy has nothing to lean on. That also explains why the government is desperate to reinvigorate exports. There are signs of anxiety within President Moon Jaein's economic team, which has to preduce tangible results by the end of the year, the halfway point in Moon's five-year term.

The global trade environment is anything but favorable, either. China and america, Korea's two largest export markets, are engaged in a trade war. The fall in computer chip prices led to a 23 percent decline in overall exports in January and an interest rate hike has eroded Korean companies' export profitability further.

In this regard, the government's short-term export support steps are welcome. To regain manufacturing competitiveness for this export-driven economy, however, policymakers should also set up a long-term strategy. As slways, the fundamental solution lies in sharpening the competitive edge to the manufacturing industry through restructuring, developing technologies, improving productivity and pushing through deregulation.