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Minister discusses energy crisis response with Korea's "Top 10" 2022-09-29

Trade, Industry and Energy Minister Lee Chang-yang held a conference with Korea’s top 10 companies and associations on September 26 to discuss the current energy crises and to seek public-private joint response measures. Among those present were representatives of Samsung Electronics, SK's SUPEX Council, Hyundai Steel, LG and Lotte Chemical.

Korea is up against numerous external and internal challenges at present amid the global energy crisis, high rates of exchange and interest, and poor investment vitality.

With domestic energy supply highly dependent on imports and energy prices rapidly rising, Korea is suffering from a trade deficit despite robust exports. Moreover, as fuel costs are not incorporated into price hikes in time, energy sector’s public companies’ losses are becoming more severe.

South Korea is not the only country to have been impacted by the global energy crisis, with Japan, Germany and such manufacturing powerhouses also hit with trade deficits and negative growth.

To counter this crisis, each country is seeking its own strong measures to reduce energy waste, raise fees and secure funding.

The Government is making thorough preparations for the coming winter season energy supply, while seeking to reduce domestic energy consumption and expand stable sources of supply.

Winter season energy supply will be secured early on, and the government, public energy corporations and private companies will be joining efforts for energy supply management through a joint emergency response system.

The goal for the coming winter is to reduce 10 percent of energy usage, led by government and public institutions placing caps on heating temperatures.

A more fundamental aim is to raise the energy prices gradually step by step to recover the price mechanism, improve public companies’ finances and support firms make efficient investments.

Minister Lee stated that “public-private joint efforts and companies’ proactive cooperation are needed in order to quickly overcome the external and internal crises and recover economic vitality.”

He requested companies to inspect their energy usage and to make strong commitment in saving energy in preparation against winter season’s energy supply challenges.

The Minister added that “as this crisis is expected to persist for a considerable length of time, it is high time to restore the energy price function and transition into a high-efficiency system that effectively responds to crises,” and explained that a price adjustment is inevitable, starting with large-capacity users.

Minister Lee stressed the importance of “overcoming economic crises through investment and labor-management cooperation.”

Noting that proactive investment is the fundamental solution to Korean economy’s overcoming high inflation and economic recession, he stated that investment has four positive outcomes, which are 1) quick economic recovery 2) job creation 3) new technology acquirement and 4) enhanced productivity.

He called for regulatory innovation, encouraging companies to actively participate in investments. The Government is continuing to propel incentive programs for corporate investment, such as lowering the maximum corporate tax rate and expanding the scope of high-tech tax breaks.

Labor-management cooperation is critical in overcoming economic crises, and the illegal strikes that are repeated every year merely add burden to businesses and the nation as a whole, failing to win public support.

With respect to the current issue on labor union law amendments, the Minister voiced that they are retrogressive in terms of global standards, may fuel illegal strikes, in danger of violating the constitution by infringing property rights and directly conflict with principles of civil liability, and therefore requires a reexamination.

Minister Lee assessed his U.S. visit as meaningful in that Korean companies’ concerns were strongly communicated, and stated that ROK-U.S. talks will continue to prevent injury on Korean companies.

Lastly, he noted the necessity of enhancing Korean industries’ basic constitution in addition to solving present problems, and informed that the Ministry is currently preparing the “Industrial Transformation Strategy” by gathering input collected from various industrial sites.