SEOUL, August 20 (AJP) - South Korea’s finance chief pledged government support for sweeping cuts in the country’s petrochemical industry, Wednesday, as officials seek to shore up competitiveness in a sector battered by global oversupply.
Deputy Prime Minister and Finance Minister Koo Yoon-cheol said that 10 major petrochemical companies have agreed to reduce as much as 3.7 million tons of production capacity by the end of the year.
The pledge came after the Lee Jae Myung administration convened its first inter-ministerial meeting on industrial competitiveness, held at the government complex in Seoul.
Koo criticized domestic producers for ignoring repeated warnings of oversupply and instead expanding facilities during past boom years without moving quickly enough into higher-value products.
“Resolving this crisis requires drastic capacity reduction and fundamental competitiveness enhancement, pursued with a do-or-die determination,” he said.
Under the plan, participating firms must submit detailed reorganization strategies by the end of 2025, with a focus on scaling back their naphtha cracking operations, the backbone of petrochemical production.
Koo pressed companies and their shareholders to put forward binding restructuring plans grounded in “painful self-rescue efforts,” and urged them to begin implementing changes as early as next month.
The government said it would provide regulatory easing, tax incentives and financial assistance to companies that commit to restructuring. But Koo warned that firms attempting to delay or avoid the process would be excluded from support programs and could face punitive measures.
He cited the shipbuilding industry’s recovery through painful restructuring as a precedent the petrochemical sector should follow.
Officials plan to hold regular reviews of the industry’s progress and promised further intervention if needed, with the aim of what Koo described as a “revival” of South Korea’s petrochemical industry.
reporter
Candice Kim
candicekim1121@ajupress.com
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