Japan has restricted the export of critical chipmaking materials to South Korea. PUBLIC DOMAIN
Experts on Monday said the current trade restrictions imposed by Japan on South Korea should be alleviated as strengthened cooperation in material, parts and equipment will lead to greater economic value.
Speaking at a seminar hosted by the Federation of Korean Industries (FKI), they noted that closer cooperation between both countries could generate added value worth $123 billion.
The seminar aimed to explore the economic impact of Japan’s export regulations on three major high-tech raw materials of Korean tech firms – hydrogen fluoride, fluorinated polyimides and photoresists – in July last year, seeking desirable future directions of bilateral economic relations.
Lee Hong-bae, professor at Dong-Eui University and chairman of the Northeast Asia Economic Association of Korea, said: “In a paradoxical sense, close cooperation with Japan is not an option but a necessity for Korea’s material, parts and equipment industries to secure a global competitive edge.
“The three sectors of the two countries generated about $81.1 billion worth of added value as of 2018 through strong division of labour. When [division is] expanded to the entire manufacturing industries, the value increases to about $123.3 billion.”
He added that the collapse of the global value chain between the two countries due to the recent regulations would mean this much loss.
Park Jae-geun, professor of Hanyang University and chairman of the Korean Society of Semiconductor and Display Technology, said: “In response to Japan’s export regulations, Korean firms responded with localisation and diversification of foreign suppliers.
“However, the results differed depending on the items. The proportion of hydrogen fluoride imports from Japan declined from 44 per cent to 12 per cent between January and May year-on-year. But, imports of fluorinated polyimides and photoresists increased.”
As for photoresists, the shipments rose 18 times through indirect imports from Belgium, Park said.
FKI vice-chairman Kwon Tae-shin said: “After Japan’s unilateral action, dependence on Japan for materials and parts was partially reduced due to Korea’s localisation of related items and securing alternative importers.
“It is a pity that there are no signs of normalisation of diplomatic relations between the two countries after the Korea-Japan summit in Chengdu, China on December 24 last year, and that the resolution of mutual export regulations through dialogue was cancelled.
FKI international cooperation division head Kim Bong-man said: “There is the worst-ever diplomatic conflict between Korea and Japan and, as a result, Korean companies are facing difficulties in doing business with Japan.
“The FKI will do its best to resolve the pending issues of mutual export regulations between Korea and Japan and lift the ban on Korean businessmen from entering Japan.”
THE KOREA HERALD/ASIA NEWS NETWORK
