Tension is apparently escalating between the Ministry of Trade, Industry and Energy and the Ministry of Economy and Finance — South Korea’s two-largest economy-related departments — as the latter recently gestured at expanding its financial leverage to take over the role of being the nation’s export policy headquarters.
The Finance Ministry has recently become unusually vocal toward concerns over the slowing trend of key industries, such as semiconductors and petrochemicals, to which the Trade Industry has expressed discontent over what it saw as power abuse by the department holding the state’s budget.
The continued fall in semiconductor shipments is expected to pull down total exports of Asia’s fourth-largest economy for the second straight month in January, according to data released by the Korea Customs Service on Monday.
The country’s exports came to $25.7 billion in the first 20 days of this month, down 14.6 percent from a year earlier. Outbound shipments for semiconductors, which have long served as the strongest export momentum, shed 28.8 percent on-year in the same period, while petroleum products and vessels also shrank 24 percent and 40.5 percent, respectively.
Amid growing anxiety that the nation’s most sustainable growth engine might die down, the Finance Ministry last week held a close-door meeting with key officials of Samsung Electronics and SK hynix, along with other chipmakers and related associations, officials said Friday.
The gathering drew the attention of the media and industry officials, as it is conventionally the Trade Ministry that takes the initiative over trade issues, including contact with individual companies, whereas the Finance Ministry is more focused on budget execution and macroeconomic agenda items.
“We discussed the trend and outlook of the global semiconductor market, but did not touch on the detailed investment plans of companies or the country’s export outlook in general,” the ministry said in an explanatory release, two days after the corresponding event.
Though the Trade Ministry refrained from official comments, disapproval was detected from within the organization, as the slowing trend in semiconductor exports has recently become a sensitive issue.
Officials, declining to be named, argued that the Finance Ministry would often abuse its power as the nation’s budget operator, which made it the most powerful department.
Adding to the apparent power struggle was a law revision earlier this month, which further empowered the Finance Ministry by transferring a key function from the trade function.
By revising the restriction of the special taxation act, the deliberation committee on new growth momentum and source technology was transferred to the Finance Ministry, despite protest from the Trade Ministry.
“The committee deals with detailed tax issues such as the range of R&D expenses, so it should henceforth be supervised by the tax department,” said the Finance Ministry in explaining the organizational change.
By Bae Hyun-jung (email@example.com)