On February 25, Deputy Prime Minister and Minister of Finance and Economy Koo Yun Cheol chaired the Ministerial Meeting on Economic Affairs and Ministerial Meeting on Strengthening Industrial Competitiveness at the Government Complex-Seoul to discuss the “Progress of the Deasan No.1 Business Restructuring Project and the Support Package,” the “Measures to Rationalize the Advance Payment System[1],” and the “Measures to Improve Water Quality in the Nakdong River.”

Key messages from DPM Koo’s remarks are as follows:

[Progress of the Deasan No.1 Business Restructuring Project and the Support Package]

The business restructuring plan for the “Daesan No. 1 Project,” which involves the merger of HD Hyundai Chemical and Lotte Chemical in the Daesan Petrochemical Complex, has been approved.

The companies will undertake self-help efforts to improve their financial structure, including a capital increase of KRW 1.2 trillion, and plan to invest approximately KRW 335 billion in transitioning to higher value-added products.

Furthermore, the government and creditor banks will firmly support the Daesan No.1 Project with a comprehensive support package of more than KRW 2.1 trillion to ensure its smooth implementation.

Financial support of KRW 2 trillion will be provided, including new funding for the transition to higher value-added products and the conversion of perpetual bonds, along with tax incentives of up to a 100% reduction in acquisition tax and up to a 50% reduction in the co-prosperity investment promotion tax.

In the event of corporate splits or mergers, special provisions will be applied, including the succession of licenses and permits and the simplification of relevant procedures.

[Measures to Rationalize the Advance Payment System]

The government will rationalize the advance payment system to support the smooth execution of contracts while enhancing fiscal accountability.

Upon the initial advance payment, payment will be permitted within the mandatory payment range of 30 to 50%, and, where contract performance is duly confirmed, the advance payment will be allowed up to 70%.

However, if the contracting authority deems it necessary – for example, for the purchase of raw materials from overseas – the initial advance payment may also be permitted up to 70%.

Starting April 1, the government will mandate the submission of a detailed spending plan and activate dedicated accounts for each contract to facilitate the proper monitoring of advance payments.

In addition, the relevant regulations will be promptly revised to allow for contract termination in cases where advance payments are repeatedly used for purposes inconsistent with their intended use.

[Measures to Improve Water Quality in the Nakdong River]

The government will improve the water quality of the Nakdong River, which has suffered severe pollution from algal blooms and industrial wastewater, to Grade I by 2030 (currently Grade II).

The conversion of livestock manure, a primary cause of algal blooms, into renewable fuel will be accelerated, while excessive fertilizer application will be curbed to minimize inflows into rivers.

Advanced water treatment technologies will be introduced to treat industrial wastewater and to facilitate the through removal of even trace contaminants not currently subject to statutory regulation.