South Korea’s semiconductor industry promotion law may miss the timing due to political strife.
A special committee of the ruling People Power Party tabled the bill on Aug. 4 and further discussions for turning it into a law, including budget-related discussions, have shown no progress at all since then. This is because national fiscal resources are limited, and the bill is facing objections from opposition lawmakers.
For the bill to be handled at the competent National Assembly committee next month, ruling party secretary Lee Chul-kyu must reach an agreement with his opposition party counterpart, Democratic Party of Korea lawmaker Kim Han-jeong, and win the consent of Democratic Party of Korea lawmaker Yoon Kwan-suk, head of the committee. In short, the handling of the bill is impossible from the beginning if the opposition party continues to object.
The Ministry of Economy and Finance is opposed to the bill for fiscal reasons. The ministry is aiming to reduce the national fiscal deficit to 3 percent or less of the national GDP next year and this goal may be affected by the bill requiring huge spending.
According to experts, companies are unlikely to increase their investment without the new law with the industry in a down cycle. Samsung Electronics announced last month that its short-term capex will depend on market conditions. In the first half of this year, the company’s capex was 21.7341 trillion won, down 13.5 percent year on year. SK Hynix recently postponed its plan to build a new plant in Cheongju.
SOURCE : BUSINESS KOREA by Jung Suk-Yee