Gov`t mulls support for Ssangyong parts suppliers

SEOUL, Jan. 13 (Yonhap) -- The government is considering measures to help local
parts suppliers overcome the fallout from Ssangyong Motor Co.'s application for
court receivership, a government official said Tuesday.
Lee Dong-geun, head of the Knowledge Economy Ministry's growth industry office,
told reporters that Seoul is looking at the feasibility of using the so-called
fast track support plan to help cash strapped companies.
The plan is designed to prevent healthy small and medium- size enterprises (SMEs)
from going bankrupt due to the downturn in overall economic conditions not
directly related to their own operations.
Ssangyong, the country's smallest carmaker, applied for court protection on
Friday after soaring fuel prices and the global economic slump greatly reduced
its sales output last year.
"Nothing has been decided about offering support, but there are intergovernmental
talks underway," the official said.
He added that because only 44 of the 213 parts suppliers sold parts exclusively
to Ssangyong, the others may not be in serious trouble and could get assistance
from other domestic carmakers that are less affected by the economic downturn.
Lee, however, maintained that while talks were underway to help hard-pressed
companies, the official position of the government has been to refrain from
offering support to specific companies and instead focus on assisting entire
business sectors.
"Such measures can include tax benefits and financial support through dedicated
SME funds and by creating an environment conducive to mergers and acquisitions,"
he said.
The ministry in charge of the country's industrial sector has maintained that any
direct support of Ssangyong and its parts suppliers must be decided on by market
actors, including creditor banks. It said any direct intervention by the
government may conflict with World Trade Organization fair trade rules.
Lee's statement comes as 10 representatives of parts manufacturers visited the
ministry earlier in the day seeking emergency assistance.
The businessmen called on the ministry to ask banks to pay promissory notes
issued by Ssangyong to SMEs that come due and give them access to special funds
aimed at promoting closer ties between SMEs and large conglomerates.
Ssangyong, owned by China's Shanghai Automotive Industry Corp. (SAIC), said,
meanwhile, that all production has been halted as of Tuesday at its plant in
Pyeongtaek, 70 kilometers south of Seoul.
SAIC bought the company for $500 million in 2004, but reported a net loss of 98
billion won in the first nine months of last year.
yonngong@yna.co.kr
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