South Korea's petrochemicals industry calls for government's deep involvement to tide over the storm

The Federation of South Korea Industries (FKI) has submitted an "emergency response strategy" to the Ministry of Trade, Industry and Energy to help South Korea petrochemical companies cope with the current crisis and improve their global competitiveness. FKI made it clear in its strategy: "Given that the government announced late last year that it would introduce support policies for the petrochemical industry, we expect to see the implementation of specific implementation plans in the first half of this year. At the same time, we recommend that this time node be included in the government's other support plans."

FKI's strategy focuses on three core areas and proposes 13 specific support measures, covering cost reduction, business environment optimization, and high-value, low-carbon transformation. In the face of the rising cost of electricity in the petrochemical industry, which has accounted for 3.2 per cent of the industry's main production expenditure, FKI expressed deep concern that the rising cost of electricity is threatening the global price competitiveness of South Korea petrochemical products. To this end, the FKI calls on the government to use its resources and funds to help reduce industrial electricity prices.

In addition, FKI also stressed the need for asset sales to transition from business restructuring to business closure, which is essential to facilitate the smooth transformation and necessary restructuring of the industry. At the same time, FKI has proposed amendments to the Fair Trade Act, in particular with regard to the current prohibition of merger provisions that may lead to the formation of a dominant market position. "According to the current Fair Trade Act, a merger will be prohibited if the combined market share leads the industry. If domestic petrochemical companies consolidate in similar business areas, they are likely to face merger barriers due to excessive market share," FKI said."

Lee Sang-Ho, head of the Department of Economy and Industry at FKI, stressed: "At present, it is urgent to enhance the viability and competitiveness of the petrochemical industry. We call on the government to increase support for the industry and revise relevant regulations to promote the restructuring and M & A of the industry."

In response to the need for a high-value, low-carbon transition, FKI recommends increased investment in pollution prevention, resource recycling, biotechnology, and carbon capture, utilization and storage (CCUS) technologies. At the same time, they proposed that the government should reserve public land for pilot projects and demonstration bases, and consider sharing auxiliary facilities in the production process, such as wastewater treatment facilities.