Gov't mulls contingency plan for Ssangyong Motor's parts suppliers

SEOUL, Dec. 29 (Yonhap) -- South Korea has a plan to help parts suppliers of Ssangyong Motor Co. in case the carmaker cannot be saved, a government official said Monday.

Kim Dong-soo, head of the Knowledge Economy Ministry's core industries bureau,
said in a radio interview that the contingency plan includes facilitating mergers
and acquisitions, helping these firms change their business spheres and securing
new partnerships.
"Seoul is carefully keeping tabs on developments and will do its part to help
capable small- and medium-sized enterprises from going bankrupt if there is a
problem with Ssangyong," he said.
The director general also said that support could be offered to the Pyeongtaek
economy that is home to Ssangyong's assembly line.
The official, however, made clear that Seoul is not considering measures to
directly help the embattled carmaker overcome its current liquidity crunch or the
drop in sales that has caused it to halt all production.
"If there is going to be any help, it should come from Ssangyong's creditor banks
and its largest shareholder," Kim said.
China's Shanghai Automotive Industry Corp. (SAIC) acquired a controlling stake in
South Korea's Ssangyong for US$500 million in 2004.
He pointed out creditor banks, including state-run Korea Development Bank, will
make their decisions based on future business prospects.
On the possibility that SAIC will abandon Ssangyong altogether, Kim speculated
that the Chinese company has a vested interest in its operations in South Korea.
The working-level official, meanwhile, said that for the entire auto industry,
there may be a need to engage in job sharing and other streamlining measures to
deal with the forecast 15 percent contraction in global demand.
yonngong@yna.co.kr
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