Unused credit cards surge, driving up consumer costs Getty Images Bank SEOUL, February 11 (AJP) - Nearly one in three credit cards issued in South Korea remains unused, adding to a growing financial burden for consumers as card companies capitalize on rising annual fees, according to new data from the Credit Finance Association of Korea. By the end of 2024, the number of dormant credit cards - those left unused for more than a year - had climbed to 19.41 million, a sharp increase from 12.99 million in 2021. That figure accounts for roughly one-third of all new credit cards issued. Card issuers cite rising production costs - between 10,000 won ($6.88) and 15,000 won per card - as justification for higher annual fees. Yet, industry data shows that these fees have become a lucrative revenue stream, with collections rising from 1.13 trillion won in 2021 to 1.33 trillion won in 2023. “There’s little incentive to address the dormant card issue when raising annual fees provides an easy solution to cover costs,” said an executive at a major credit card company, speaking on condition of anonymity. A decade ago, many credit cards charged annual fees as low as 2,000 to 5,000 won. Those options have largely disappeared, with most cards now commanding fees exceeding 10,000 won. Beyond financial costs, dormant cards can negatively impact credit evaluations. The Korea Credit Information Services (KCS) considers card-related data when assessing credit limits, particularly for individuals holding three or more credit cards. The surge in inactive cards is largely driven by aggressive competition among issuers, particularly with the proliferation of Private Label Credit Cards (PLCCs). These co-branded cards, often launched in partnership with major retailers like Coupang, E-Mart, and Olive Young, lure consumers with short-term benefits but often go unused after initial promotions expire. Regulatory policies have also played a role. Government restrictions prevent the automatic cancellation of dormant credit cards before their standard expiration - typically five years - contributing to the growing backlog of inactive accounts. In response to the issue, banks and card companies launched a joint service last September to help users manage dormant cards. However, the initiative has gained little traction, with only about 1,500 users signing up to date. 2025-02-11 14:36:51

US tariffs may cut South Korean exports by $44.8 billion: KIEP Workers are examining machines at a Samsung Electronics factory. Courtesy of Samsung Electronics SEOUL, February 11 (AJP) - South Korean exports could decline by as much as $44.8 billion if the United States implements blanket tariffs on trading partners, including those with bilateral free trade agreements, the state-run Korea Institute for International Economic Policy (KIEP) has warned. The prediction comes as U.S. President Donald Trump announced plans to impose a 25 percent tariff on steel and aluminum imports while signaling the possibility of additional reciprocal tariffs, escalating global trade tensions. The warning raises concerns for South Korean firms, which have seen their North American revenues surge nearly 20 percent last year, reflecting a deepening reliance on the U.S. market. But looming tariff policies under the Trump administration are adding pressure to their outlook. According to corporate analysis firm Leaders Index, major South Korean corporations generated 313.5 trillion won (about $215.5 billion) in North American sales during the first three quarters of 2024, a robust 19.5 percent increase from the previous year’s 262.3 trillion won. The region’s share of total revenue climbed to 28.1 percent from 25.2 percent, underscoring the growing significance of the U.S. market for Korean businesses. The information technology and electronics sector posted the strongest gains, with 12 companies in the industry recording a combined 114.3 trillion won in North American sales — an increase of 42.7 percent from the previous year. SK hynix led the charge, nearly tripling its U.S. revenue to 27.3 trillion won, buoyed by its dominance in high-bandwidth memory chips for artificial intelligence applications. Samsung Electronics, another major player, saw a 24 percent jump in its American sales, reaching 84.7 trillion won. Meanwhile, South Korea’s automakers also recorded solid gains, with Hyundai Motor and Kia Corp. reporting increases of 17 percent and 12 percent, respectively, in the North American market. In response to the tariff risks, companies with U.S.-based manufacturing facilities, such as Samsung Electronics and Hyundai Motor, may need to ramp up domestic production to mitigate potential tariff-related disruptions, according to Leaders Index. 2025-02-11 10:13:56

US tariffs threaten jobs in Korea's manufacturing sector Workers assemble parts at a Hyundai Motor auto factory. Courtesy of Hyundai Motor Group SEOUL, February 10 (AJP) - South Korea’s automotive and steel industries are confronting the prospect of a major production overhaul as concerns grow over U.S. President Donald Trump’s proposed universal tariffs, a move that could upend the nation’s manufacturing sector. The specter of tariffs ranging from 10 to 20 percent on Korean vehicles, coupled with potential reciprocal measures, threatens to erode the economic gains secured under the Korea-U.S. Free Trade Agreement (KORUS FTA). Automakers, fearing a steep decline in competitiveness, are accelerating plans to shift production overseas. “The relocation of domestic manufacturing facilities will inevitably lead to job losses, potentially triggering a prolonged economic slowdown,” said Lee Cheol-in, an economics professor at Seoul National University. Manufacturing accounts for 28 percent of South Korea’s gross domestic product - a significantly higher proportion than in other industrial economies, including Germany (20.4 percent) and the United States (11.1 percent). With the sector serving as a pillar of the South Korean economy, any disruption could have far-reaching consequences. According to S&P Global, Hyundai Motor and Kia stand to see a 19 percent drop in operating profits if a 20 percent tariff is imposed. In anticipation of these challenges, Hyundai Motor Group has announced plans to expand production at its Metaplant America facility in Georgia, increasing its U.S. manufacturing capacity to 1.2 million vehicles annually by 2025. The shift is expected to diminish output at its Korean plants, which last year produced nearly one million vehicles for the U.S. market - representing more than half of the company’s total American sales. “Even in a best-case scenario, we anticipate a reduction of 100,000 to 300,000 units in domestic production,” said Lee Hang-koo, former head of the Junbuk Institute of Automotive Convergence Technology. “A decline of 100,000 units alone would necessitate the shutdown of one production line at Hyundai’s Ulsan plant for a year, impacting approximately 3,000 workers.” The situation is even more precarious for GM Korea, where speculation of a complete withdrawal from the market has intensified. The automaker relies heavily on U.S. exports, which accounted for 83.8 percent of its total production last year, with more than 418,000 vehicles shipped overseas. South Korea’s steel industry, already contending with China’s aggressive market dumping, faces additional pressure. Hyundai Steel Company and POSCO are exploring overseas expansion, with Hyundai Steel considering a $7 billion investment in the southeastern U.S. to mitigate the effects of potential tariffs. 2025-02-10 16:49:35

Korea's economy under greater downward pressure, state think tank warns Korea Development Institute (KDI) office in Sejong City/ Courtesy of KDI SEOUL, February 10 (AJP) - South Korea’s state-run Korea Development Institute (KDI) warned of mounting risks to the nation’s economy, citing sluggish production growth and worsening domestic and external conditions. In its February economic trends report, released Monday, the KDI noted that while industrial production showed some growth, broader economic challenges persisted. "Domestic demand remains weak due to sluggish consumption and a downturn in construction investment," the KDI said. "At the same time, export growth is slowing, particularly in non-semiconductor sectors." Consumer spending has been hit hard, with retail sales declining across key categories, including automobiles, home appliances, and clothing. The consumer sentiment index stood at 91.2 in January, well below the neutral threshold of 100, signaling widespread caution among households. Although facility investment has maintained its recovery, driven by increased spending in the semiconductor sector, construction activity remains depressed. Labor market conditions have also softened. The number of employed individuals dropped by 52,000 in December compared to the previous year, a decline attributed to job losses in construction and manufacturing, as well as the expiration of government-backed employment programs. Inflation edged higher in January, with consumer prices rising 2.2 percent year-on-year, driven primarily by a 7.3 percent surge in petroleum product prices. Core inflation, however, remained subdued at 1.9 percent, reflecting tepid domestic demand. Industrial production grew 1.4 percent in December, buoyed by an increase in working days and improved manufacturing output. However, the ongoing struggles in the construction sector continued to weigh on overall economic performance. The report also highlighted ongoing geopolitical uncertainties, which, along with domestic economic concerns, have dampened both household and business confidence. 2025-02-10 14:50:08

Trump's tariff plan for steel, aluminum imports rekindles trade tensions U.S. President Donald Trump salutes before a Superbowl game in Louisiana, Feb. 9, 2025. Reuters-Yonhap SEOUL, February 10 (AJP) - U.S. President Donald Trump has announced plans to impose a 25 percent tariff on steel and aluminum imports, a move that could disrupt trade relations with key allies, including South Korea. The decision builds upon tariffs first introduced during Trump’s initial term - 25 percent on steel and 10 percent on aluminum - which had previously allowed exemptions for select trading partners through duty-free quotas. South Korea, the fourth-largest supplier of U.S. steel imports after Canada, Brazil, and Mexico, has maintained a special quota status, enabling it to avoid tariffs on 54 product categories totaling 2.63 million tons. South Korean steelmakers, which have strategically limited exports to preserve quota benefits and circumvent the 25 percent tariff, may now need to reassess their approach to the U.S. market in light of the proposed changes. In addition to steel and aluminum tariffs, Trump is expected to outline further details on reciprocal tariffs in remarks scheduled for Tuesday or Wednesday. “And very simply, it’s, if they charge us, we charge them,” Trump said, reiterating his protectionist stance. The implications for South Korea remain uncertain despite the existing U.S.-Korea Free Trade Agreement (KORUS FTA), which has eliminated tariffs on about 98 percent of traded goods, according to a 2022 report by the Korea Institute for International Economic Policy (KIEP). South Korea’s vulnerability stems from its sizable trade surplus with the United States, which reached approximately 81 trillion won last year, making it the eighth-largest surplus country in U.S. trade relations. Trade analysts suggest that the broader economic impact could extend beyond immediate tariff concerns. “The implementation of universal tariffs could mark a turning point for Korean exports,” said Yang Ji-won, a senior researcher at the Korea International Trade Association (KITA). A KITA report released Sunday indicated that if universal tariffs take effect, South Korea’s total exports could decline by 1.9 percent based on figures from January to November of last year. The projected impact would be less severe, at 0.1 percent, if additional tariffs were limited to China, Canada, and Mexico. 2025-02-10 14:06:10

Korean government seeks foreign investment to continue 'Blue Whale' oil project A gas drilling facility in the East Sea/ Courtesy of the Korea National Oil Corporation SEOUL, February 10 (AJP) - South Korea’s controversial offshore oil exploration project, dubbed “Blue Whale,” faces an uncertain future after initial drilling yielded disappointing results. The state-run Korea National Oil Corporation (KNOC), which is leading the effort, is now scrambling to secure foreign investments to sustain further exploration. President Yoon Suk Yeol had touted the project as potentially holding up to 14 billion barrels of oil and gas reserves. However, the venture suffered a major setback when its first drilling operation - costing approximately 100 billion won ($68.5 million) - failed to yield economically viable results. The debt-laden company, burdened with 19.6 trillion won in liabilities, must now seek alternative financing, either through foreign investments, which it confirmed plans to pursue in March, or through corporate bond issuance. The Ministry of Trade, Industry and Energy defended the project’s prospects on Saturday, emphasizing the necessity for additional drilling at six other promising sites, despite each requiring an investment of 100 billion won. The ministry argued that successful gas development would generate broader economic benefits beyond project profitability, including improved trade balance, value-added creation, and enhanced industrial competitiveness. Drawing on past success, officials cited the East Sea gas field, which operated until 2021. That project generated sales of 3.1 trillion won after an initial investment of 1.3 trillion won, including drilling costs, while also contributing to government revenue through taxes and royalties. “This is just the first step. The next phase can proceed with more reliable data at hand,” said Lim Jong-sei, a professor of energy resources and engineering at Korea Maritime and Ocean University. While the ministry indicated that multiple foreign firms have expressed interest in the project, industry experts caution that a heavy reliance on foreign investment could significantly diminish South Korea’s share of any future development profits. 2025-02-10 11:12:00