SEJONG, Jan. 14 (Korea Bizwire) - South Korea will make full use of its free trade agreements (FTAs) and diversify products and services it sells overseas to revive exports in 2016 after a disappointing performance a year earlier, the trade ministry said Thursday.
In a 2016 policy report to President Park Geun-hye, the Ministry of Trade, Industry and Energy said exports and imports will likely reach US$538.2 billion in exports and $448.2 billion this year, resulting in a trade surplus of $90 billion.
This represents a 2.1 percent rise in exports from $527.2 billion tallied for all of last year, with inbound shipments gaining 2.6 percent from $436.8 billion. The country’s trade surplus will remain largely unchanged from last year.
“All available resources will be directed towards trade promotion that can boost exports and contribute to economic growth,” Trade and Industry Minister Joo Hyung-hwan said.’
According to the policy plan, the government will use the free trade pact with China to help local companies make greater headway into the vast market to prop up exports that actually dragged down growth in 2015.
Efforts will be made to increase presence in advanced industrialized markets that will likely lead growth in the new year, while pushing to join so-called mega FTAs, like the Regional Comprehensive Economic Partnership (RCEP), and forging ahead with a three-way open free trade arrangement involving South Korea, China and Japan.
Seoul plans to capitalize on other open trade agreements it signed with Vietnam, Canada, Australia, New Zealand and India.
Outbound shipments can be further bolstered by appropriate use of the country’s Economic Development Cooperation Fund that can help local companies win foreign building projects.
Asia’s fourth-largest economy and sixth-largest exporting nation in the world will seek to increase consumer goods exports, which only accounted for 5.3 percent of all exports, excluding mobile phones, cars and large household appliances.
“There is a promising market for consumer goods ranging from cosmetics, fashion items and everyday household goods to agrofisheries and pharmaceuticals,” it said. “Cultural contents and medical services possessed plenty of growth potential.”
The ministry said even in the manufacturing sector, where autos, steel and ships backtracked in 2015, shipments of solid-state disks and various screens like organic light-emitting diodes have grown by roughly 25 percent on-year.
To bolster consumer goods exports, the government will offer 4.8 trillion won (US$3.98 billion) in trade-related financing in 2016 and lower export insurance premiums. The government pledged to provide 87.7 billion won in research and development support to the private sector, as well as play an assisting role in overseas marketing.
The ministry will also help companies that only make products exclusively for the domestic market find outlets abroad.
“More funds will be allocated to bolster the competitiveness of small and medium enterprises, while firms that achieve success in foreign markets can benefit from preferential interest rates for outstanding loans,” it said.
Besides traditional methods of bolstering export growth, Seoul plans to use e-commerce to increase outbound shipments in order to ship out 1.5 trillion won worth of goods in the new year through online malls like Amazon and Taobao.
South Korea, which has been focusing support on manufacturing, plans to reset its strategy to offer more help to companies that make consumer goods and the services sector, the ministry said, adding it could breathe new life into exports.