Japanese Prime Minister Shinzo Abe and South Korean President Moon Jae In at G-20 Summit in Osaka. (Image via Kyodo News)

Japan’s Control Over High-Tech Materials Export to Further Restrain South Korean Economy

Kinanty Nadia Putri
Market & Investment
Export Import
Jul 06, 2019
2889
South Korea’s economy is currently on the verge of a decline due to the restrictions on high-tech materials export imposed by the Japanese government to the country.

The toughened procedures for exporting Japanese materials such as fluorinated polyimides resist and hydrogen fluoride—three crucial components used in smartphone display and chip—has hit hard the chip-making industry in South Korea. The country is known for being heavily reliant on the Japanese imported high-tech materials to make goods to sell domestically and overseas, which makes the chip-making business as the Korean’s pillar industry. The industry account itself given for about 6% of the country's GDP.

However, with the restrictions that drop the 10% export volume could lead to the point drop of 0.6% in the growth rate, a chief economist of KB Securities Chang Jae-chul explained.

The new Japanese export regulations on South Korea rolled out on Monday (7/1) and have been effectively implemented since July 4. Under this requirement, Japanese exporters need to seek approval with its authorities for each exporting contracts, in which the previous rules only required a single approval to allow such materials to be exported.

In addition, Japan also plans to remove South Korea from its ‘white list’ that will no longer protect it from heavy customs clearance for importing Japanese goods. As the plan is going to efface South Korea’s preferential treatments granted thus far, this will be another major risk to the country’ economy.

If the dispute lasts for more than 90 days, South Korea’s GDP and the economy at large will also be hit hard.

Cited from another source, it is reported that Japan’s restriction on high-tech materials export to South Korea is in connection with a dispute over compensation for forced Korean ‘comfort women’ that occurred during Japan's 1910-1945 occupation of the Korean peninsula. The dispute is the latest flashpoint that keeps over-shadowing the two countries relation ever since.

In response to this, an activist group Movement for One Korea staged a protest on Friday (7/5) in Seoul and was calling for a boycott of the Japanese products.

Source: http://www.koreatimes.co.kr/www/biz/2019/07/175_271817.html

SouthKorea , Japan , Export , Tech , Market , Economy