The supplementary budget announced by the South Korean government on the 31st includes measures to stabilize supply chains — such as subsidizing naphtha import costs — and support industries affected by the crisis. The budget also allocates 90 billion won for electric vehicle subsidies to expand the supply of electric cargo trucks widely used by small business owners.
A total of 700 billion won will be invested in stabilizing energy supply chains. Of that, 500 billion won has been earmarked to subsidize naphtha import costs amid growing supply concerns triggered by the potential blockade of the Strait of Hormuz, the world economy's "energy artery." Naphtha is a basic petrochemical feedstock derived from crude oil refining. Ethylene, propylene and other products obtained through thermal cracking are used in most chemical products including plastics, synthetic fibers, synthetic rubber and vinyl. However, disruptions in crude oil imports caused by the Middle East crisis have also put naphtha supplies at risk.
The government will also expand petroleum stockpiling to prepare for a prolonged Middle East crisis. It plans to invest 200 billion won to stockpile 1.3 million barrels, aiming to achieve the 5th Petroleum Stockpiling Plan's 2030 target of 102.6 million barrels ahead of schedule. The budget also includes 8.1 billion won for expanding rare earth recycling facilities and raw material supplies — a strategic resource — and 3.9 billion won for diversifying imports of urea, which is highly dependent on the Middle East.
Support for companies and industries hit by high oil prices will be strengthened. The government will inject 650 billion won into the Korea SMEs and Startups Agency (KOSME), Korea Credit Guarantee Fund (KODIT), Korea Technology Finance Corporation (KOTEC) and Korea Trade Insurance Corporation (K-sure) to provide 7.1 trillion won in liquidity. KOSME will offer 350 billion won in emergency business stabilization funds and new market entry support funds. KODIT and KOTEC will provide special guarantees of 2.5 trillion won and 1.2 trillion won, respectively. K-sure will also provide 3 trillion won in guarantees covering raw material import payments for exporters and their Middle East-based subsidiaries.
To ease logistics burdens on exporters, the number of export vouchers will be doubled from 7,000 to 14,000 at a cost of 100 billion won, and additional support will be provided for shared logistics centers in the Middle East.
The tourism industry will receive low-interest policy funds of 300 billion won and 30.6 billion won for product development and promotional campaigns to attract foreign tourists. Customized support of 7 billion won — including technology consulting and incumbent worker training — for the high-value transformation of the petrochemical and steel industries is also included.
The budget supports the transition to renewable energy as well. Subsidies for renewable energy generation facilities such as solar and wind power will be expanded to a record 1.1 trillion won. Initiatives include financial support for "Sunshine Income Villages," small-scale balcony solar panel distribution for apartments, and expanded development of artificial intelligence (AI) distributed power grid networks.
In response to rising electric vehicle demand, the number of electric cargo trucks supplied — mainly used by small business owners — will be increased from 36,000 to 45,000 units. To fund this, 90 billion won in EV subsidies has been included in the supplementary budget.