The Assembly’s Fiscal and Economic Planning Committee held a public hearing April 29 at the main Assembly building to discuss the need for the proposed Strategic Export Finance Support Act.
The bill, introduced by Democratic Party lawmakers Han Jeong-ae and Ahn Do-geol and others, would establish a Strategic Export Finance Fund to build a system for timely financing in export projects where competition between countries is intense.
Speakers said the global defense market has shifted beyond price competition to “financial package” competition, with buyers often demanding technology transfer, offset deals and investment as part of contract terms — burdens difficult for companies to shoulder alone.
Korea’s defense firms, despite favorable conditions tied to the Middle East and the Russia-Ukraine war, have struggled to secure policy financing. Data released from the Export-Import Bank of Korea showed defense industry lending accounted for just 4.7% last year, compared with ships at 19.3%, construction plants at 11.1%, autos at 9.9% and electronics at 9.9%.
To supplement limited lending, the bill calls for creating the fund through contributions from exporters that receive support such as buyer’s credit. Companies would pay about 1% of the disbursed amount, or up to 5% if linked to export industry cooperation, to help backfill financing shortfalls.
Kwon Heon-cheol, a professor of defense economics at Korea National Defense University, said fast-growing defense exports face heavy burdens including offset deals. “Large-scale exports require buyer’s credit and guarantees to be combined, so national-level financial support is needed,” he said.
Park Chang-gyun, a research fellow at the Korea Capital Market Institute, said existing policy finance has limits in spreading risk across individual firms, making a separate fund necessary for a stable supply of support.
The hearing also cited recent defense exports to Poland as an example of constraints. In a $44 billion project, the Export-Import Bank of Korea and the Korea Trade Insurance Corp. provided about $15 billion, but later faced limited additional capacity, affecting the bidding competitiveness of major Korean defense companies.
Some participants urged revisions to avoid overlap with a separate bill introduced by the National Defense Committee to create a defense industry development and export promotion fund. Attorney Park In-yong of law firm Yulchon said he agreed with the purpose of the export finance bill but called for clarifying the relationship and scope of the bills to prevent double charges.
The Fiscal and Economic Planning Committee is set to hold a full meeting April 30 to decide whether to send the bill to a plenary session. If passed, officials plan to pursue institutional steps with a goal of establishing the fund in September.
Committee Chair Lim I-ja said there are concerns that exporters’ burdens could be excessive during the fund-raising process and said the bill needs improvements, including addressing potential overlap with policy finance and fairness issues in profit distribution.
* This article has been translated by AI.
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