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South Korea to create fund to cope with supply chain snags
The fund will help procure raw materials and other items essential for "economic security".
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South Korean President Moon Jae-in speaks on the occasion of the third anniversary of his inauguration at the presidential Blue House in Seoul, South Korea, May 10, 2020. (Reuters/Kim Min-Hee)
S
outh Korea President Moon Jae-in said on Monday the government would create a fund to better secure key raw materials essential for manufacturing and exporting in the face of current supply bottlenecks.
"As a control tower, the Presidential 'Economic Security Supply Chain Management Committee' will be newly established, and a fiscal backing will be made as we will create a fund to stabilize supply chain woes," Moon said at a cabinet meeting, according to a statement from the presidential Blue House.
He said the government would make a list of raw materials and other items essential for "economic security" purposes, and manage them to protect local companies against shortages.
With consumer inflation hovering at a decade high, everything from memory chips to food is getting more expensive, hurting sales at exporters such as Hyundai Motor and LG Energy Solution.
Over in the United States, the annul inflation rate has hit a 40-year high at 7.5 percent while Euro zone inflation surged to record high of 5 percent in December, underscoring supply chain challenges for export-led economies like South Korea.
Hyundai and its affiliate Kia Corp, together among the world's top 10 automakers by sales, have forecast a 12.1 percent jump in their combined global sales for 2022, after their sales fell almost 4 percent short of a target of 6.92 million vehicles last year due to the chip shortages.
South Korea's January factory activity grew at the fastest pace in six months, a private-sector survey showed on Feb. 3, but persistent supply chain woes weighed on the outlook.
Respondents in the survey said a stronger recovery was held back by sustained material shortages and the impact of the Omicron variant of the coronavirus.
