South Korea's Finance Minister Choo Kyung-ho said Monday that uncertainties surrounding domestic companies regarding the United States' acts on electric vehicles (EVs) and semiconductors have been eased, and the Seoul government will continue active support for corporate investment in advanced sectors, his office said.
Choo made the remarks during the annual consultation meeting with Gene Fang, associate managing director of global credit appraiser Moody's Investors Service, and other Moody's officials in Seoul, according to the finance ministry.
During the talks, the agency officials asked about the prospects and strategies that the South Korean government and companies have regarding the U.S.' Inflation Reduction Act (IRA) and the Chips and Science Act.
"Uncertainties regarding impacts of the acts on our industry circles have very much been eased in line with the U.S. government's recent steps. We will closely monitor related issues and continue consultations with the U.S. side," Choo said.
South Korean chipmakers have made large-scale investments, and the government will support the moves through tax incentives, nurturing talent and various other measures, he added.
Under the Chips Act, foreign chipmakers can receive subsidies totaling US$52.7 billion and tax incentives for setting up production facilities in the U.S.
As the act came with a number of major strings attached, such as requiring companies receiving subsidies to submit data on their cash flows, yield rates and profitability, the Seoul government has vowed active consultations with Washington during the 60 days of public comment.
The IRA gives up to $7,500 in tax credits to buyers of EVs assembled only in North America, sparking concerns that Hyundai Motor Co. and its smaller affiliate Kia Corp. could lose ground in the U.S. market, as they make EVs at domestic plants for export to the U.S.
But new guidelines announced last week helped address some concerns by "substantially" reflecting South Korea's opinions in terms of conditions for tax credits, according to Seoul's industry ministry.
Speaking of the economic situation, Choo said the South Korean economy is forecast to recover after the second half of this year in line with China's reopening policy measures and a possible global economic turnaround.
He also noted the "limited impacts" of the recent global banking system turmoil on the South Korean financial market, according to the ministry.
"We, however, cannot rule out the possibility of instability in the global financial market. We will closely watch the developments with extra caution for swift responses in close consultation with the ministries and institutions concerned," he added.
The agency will hold a series of meetings with officials from the finance ministry, the Bank of Korea, the unification ministry and other agencies through Wednesday to discuss the economic situation, prospects and the overall policy response, the ministry said.
Moody's has maintained its credit rating for South Korea at "Aa2," the third-highest level on the company's table, with a stable outlook, since 2015.
Source: Yonhap News Agency