South Korea to invest $6.48 billion to cut reliance on Japanese imports

The ruling of a South Korean court ignited bilateral trade ties. Since then, relations have tread mostly southwards.

On Monday South Korea announced, it plans on investing $6.48 billion (7.8 trillion won) in research and development for local materials, equipment and parts over the next seven years in order to cut its reliance on Japanese imports.

The development comes in the wake of Japan on Friday dropping Seoul from its “white list” – a list of countries with whom it fast-tracks import/exports – thus intensifying a row over wartime forced laborers.

Last month, Japan its tightened controls over the export of materials used to make chips. The move has threatened to disrupt global semiconductor supplies. Affected companies range from China’s Huawei to Apple Inc.

“We want to turn the crisis into an opportunity for the materials, parts and equipment industry,” said Sung Yun-mo, South Korea’s industry minister, at a press conference.

As a result, South Korea now plans on attaining “self-sufficiency” status for at least 100 key components, materials and equipment used in making chips, batteries, displays, automobiles and other products, over the next five years.

The plan aims to “address structural weakness in South Korea’s materials, parts and equipment sector, which heavily depends on a particular country,” said the South Korean government in a statement.

South Korea has also laid out measures, including providing financial support of more than 2.5 trillion won, for overseas acquisitions.

Japan has cited unspecified security reasons for its export curbs.

In 2018, a South Korean court had ruled that Japanese firms will have to pay compensation for wartime forced laborers – a matter Japan said it had settled in the 1965 treaty which normalized bilateral relations.

($1 = 1,204.5100 won)

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