Emergency economic support granted to Seosan and Pohang amid industry downturn

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Emergency economic support granted to Seosan and Pohang amid industry downturn

Published: 29 Aug. 2025, 14:51

Audio report: written by reporters, read by AI

A view of the Daesan Petrochemical Complex in South Chungcheong, home to major petrochemical firms including LG Chem, Lotte Chemical and HD Hyundai Chemical [YONHAP]

The Ministry of Trade, Industry and Energy on Thursday designated Seosan in South Chungcheong and Pohang in North Gyeongsang as “industrial crisis response zones,” granting them two years of emergency economic support until Aug. 27, 2027.

Seosan, home to the Daesan Petrochemical Complex, one of Korea’s three largest such hubs, has been hit by a slump in the petrochemical industry. Pohang, where steelmaker Posco operates its flagship plant, is suffering from a global oversupply of steel.

The designation comes at the request of local governments struggling with stagnating regional industries. As a result, the central government will roll out an array of support measures.

The Korea SMEs and Startups Agency will provide loans of up to 1 billion won ($720,400) at an annual interest rate of 3.71 percent, with a two-year grace period and a five-year repayment schedule. The Small Enterprise and Market Service will offer loans of up to 70 million won at an annual interest rate of 2.68 percent under the same repayment terms.

Subsidy rates for facility investments will also be raised. Large companies will be eligible for subsidies covering 12 percent of their investment costs, up from the current 4 to 9 percent. For small and medium-sized enterprises, the rate will increase to 25 percent from the current range of 8 to 15 percent.

Policy finance institutions will offer maturity extensions and repayment deferrals for SMEs. Korea Credit Guarantee Fund and Korea Technology Finance Corporation will also launch preferential guarantee programs for subcontractors and small business owners.

Seosan becomes the second industrial crisis response zone to be designated due to a petrochemical industry downturn, following Yeosu. The industry is grappling with a supply glut from China, which has triggered a drop in global prices and squeezed profit margins in Korea and other competing countries.

Pohang’s steel sector has faced similar headwinds, with falling prices and weak demand amid a global economic slowdown and excessive production capacity in China.

“The government will provide additional tailored support to strengthen corporate competitiveness,” the ministry said in a statement.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM WON [[email protected]]