KODIT to Create 110,000 Jobs Through Various Campaigns
Korea Credit Guarantee Fund (KODIT) will stage active campaigns to create 110,000 jobs in 2011 in keeping with the government's efforts to solve the youth jobless problem, a top manager of the fund said. "Following 2010, the high unemployment rate of youths has been emerging as the most urgent task to be solved. Accordingly, we will make a strong push for campaigns to increase jobs for young people this year," Ahn Taik-soo, chairman and CEO of KODIT said.
"First of all, KODIT will stage a campaign supporting youths' business start-ups to create 70,000 jobs. In addition, it will start a campaign to offer a preferential treatment to companies hiring more workers in order to produce 40,000 jobs," he said. As a concrete step, KODIT will extend KRW 2.35 trillion in credit guarantees to 21,000 start-ups to help the newly established companies employ 69,000 workers, he explained. "To jack up the success rate of start-ups, we will expand the credit guarantee commission discount rate to 0.3 percentage points from 0.1 percentage point," Ahn said. KODIT will also extend credit guarantees amounting to KRW 6.5 trillion to 7,000 companies and by hiring workers in an attempt to create 41,000 jobs.
Supports for promising construction companies
Noting that construction companies are facing serious difficulty owing to sluggish construction business, Ahn said, "KODIT will exert all-out efforts for recovery of the domestic construction business by actively supporting construction companies suffering from temporary shortage of liquidity."Related to this, we will actively foster future-oriented small and medium-sized builders by extending liquidity through the issuance of collateralized bond obligation (CBO). In 2011, we will find 240 promising mid-tier construction firms and extend about KRW 1.2 trillion in credit guarantees to them," he said.
2011 credit guarantee direction
KODIT will seek flexible operation of the total credit guarantees and pursue "selection and concentration" in the guarantee assistance business this year, the chairman said. Commenting that the total credit guarantees will reduce by KRW 0.2 trillion from KRW 45.1 trillion at the end of 2010 to KRW 44.9 trillion at the end of 2011, Ahn said, "KODIT will seek effective guarantee business under the long-term direction to reduce the total credit guarantee on a gradual basis.
"For instance, general guarantees will decrease by KRW 1.3 trillion from KRW 38.8 trillion at the end of 2010 to KRW 37.5 trillion, but special guarantees for market stabilization, including bridge loan guarantees and construction firm liquidity guarantees, will increase by KRW 1.2 trillion from KRW 2.1 trillion to KRW 3.3 trillion during the corresponding period," he said.
In particular, KODIT plans to supply a total of KRW 16 trillion in credit guarantees for the future growth engine sector this year. The total breaks down into KRW 7.5 trillion for exporters, KRW 4 trillion for green growth enterprises and KRW 4.5 trillion for promising service companies. It will also provide KRW 15.5 trillion to the job creation sector, including KRW 9 trillion for business start-ups and KRW 6.5 trillion for companies hiring more workers. "We are also planning to extend credit guarantees to market-friendly small and medium-sized enterprises for their restructuring program this year," he noted.
Preemptive risk management
KODIT will build an effective managerial foundation this year by introducing a preemptive risk management system, the top manager said. "We will introduce a scenario management system based on scientific prediction on guarantee insolvency rate. At present, we are forecasting the guarantee insolvency rate to reach around 5.3 percent in 2011," he said. "In line with this, we will introduce a liquidation system for marginal companies. Under the system, we will classify marginal companies into three categories - viable, viable conditionally, and exit companies. Instead of supporting companies with low possibility of revival unconditionally, we will strengthen selected assistance for viable companies through effective distribution of guarantee resources," said Ahn.
For viable companies, KODIT will actively support them to improve their competitiveness through rescheduling of credit guarantee, additional extension of credit guarantee and offering of management consulting service, he said. "For those subject to liquidation, however, it will curtail credit guarantees on a step-by-step basis after establishing a plan to cancel guarantee and concluding a special arrangement," he noted.
Cyber loan marketplace for small and medium-sized firms
"An increase in financial costs is the main culprit of weak competitiveness of smaller companies. However, the dependence of domestic smaller companies on indirect financial market remains at a very high level, threatening their competitive power. "To make things worse, an increase in financial costs creates a vicious circle leading to worsening of profitability, fund crunch, a hike in debts, and a rise in financial costs again," he explained. Accordingly, KODIT introduced the cyber loan marketplace for small and medium-sized companies, the place of interest rate shopping through market competition, in January this year to pull down the lending rate and arrange a foundation to bolster smaller companies' competitiveness, Ahn said.
Through the cyber loan marketplace opened at the KODIT homepage, smaller companies and banks can exchange lending information and conclude a lending contract. In 2010, KODIT created 100,000 jobs through campaigns for business start-ups and creation of jobs. It has also been staging a "great innovation (GI) campaign" designed to seek tasks for the introduction of an advanced system and autonomous innovation. "Through the GI campaign, KODIT has succeeded in creating future-oriented organizational culture, which pushes for voluntary and creative management reform, escaping from the past bureaucratic and conservative organizational culture, "he added.