South Korea has focused on increasing exports and diversifying imports. Its top exports are integrated circuits, cars, and refined petroleum. In 2021, exports increased 25.8% to $644.5 billion. Imports also increased 31.5% to $615.05 billion as South Korea aimed to reduce reliance on China. The government supports exports through loans, insurance, subsidies and duty drawbacks. South Korea is a member of the Regional Comprehensive Economic Partnership and exports most through the ports of Busan and Incheon and the Incheon International Airport.

1. Export and Import
Logistics - South
Korea

2. Geographical Nature of South Korea
 South Korea is located in the Korean
Peninsula in East Asia.
 All three sides of the land are water.
 The Korean Peninsula is divided into two
countries – North Korea and South Korea.
 The peninsula is bordered by China
(northwest) and Russia (northeast). It is
separated from Japan to the east by the
Korea Strait and the Sea of Japan (East Sea).

3. The Export and Import Goals
Export Goals: South Korea mainly focuses on increasing its
exports as much as possible.
In 2020, South Korea's exports were USD 512.49 billion in 2020,
and South Korea's exports posted USD 644.5 billion, the highest,
in 2021. The top exports of South Korea are Integrated Circuits,
Cars, Refined Petroleum, Passenger and Cargo Ships, and Vehicle
Parts.
South Korea's export is increased by 25.8%.
Import Goals: The goal is to diversify imports by having supply
chain alliances with many countries apart from China, from whom
they import most of the things from.
Compared to the year 2020, South Korea’s imports raised in 2021
and were USD 615.05 billion (Imports from the USA, Japan,
Australia), up to a 31.5 % increase.
The top imports of South Korea are Crude Petroleum, Integrated
Circuits, Petroleum Gas, Refined Petroleum, and Cars.

4. Support provided by the Korean Government for Exports
• Financial incentives
Export related loans: Export promotion fund and export growth fund by
Korea EXIM bank
Export finance: It is currently used in export promotion measures in
Korea. The Korea EXIM Bank has lent to the export firms. Export finance
covers mainly capital goods, such as industrial plants, machinery, and
ships.
Export insurance: It is provided by Korea Trade Insurance Corporation. It
helps exporters increase their exports by protecting them against
losses.
• Export Subsidy: Korean government has given a huge number of
subsidies to promote export-related industries.
• Duty drawback scheme: Duty Drawback Scheme aims to provide the
refund of custom and excise duties paid on inputs or raw materials and
service tax paid on the input services that are used to manufacture
export goods. The government started to use the duty drawback
scheme to boost exports in 1975.

5. The Regional Trade Block in which South Korea is a member in
Regional Comprehensive Economic
Partnership
• It is one of the largest regional
trade blocks.
• It has both ASEAN and Non-ASEAN
country members.
• South Korea is the 11th country to
join RCEP. So, RCEP has 11 member
countries.

6. Important incentives given by the Government in terms of Free Zone
• Tax Incentives

7. Important incentives given by the Government in terms of Free Zone
• Financial Support
Cash grants for the establishment of fees for
factory and research facility, employment,
education and training subsidy.
Infrastructure support: Road, rail, airport,
port, sewage, etc.
Foreign education, research institution
support: Preparation, initial operation, and
construction expenses for foreign education,
and research institutions.
• Other supports such as Free foreign exchange
transactions, Relief from labor regulations.

8. Maximum exporting countries of South Korea

9. Maximum importing countries of South Korea

10. Sea Port / Airport / Border Terminals through which maximum export
happens
• Port of Busan (situated at the southeastern tip of
the Korean peninsula)
It is the largest port in South Korea and exports
machinery, manufactured goods, and containerized
cargoes.
It is the world's fifth-busiest container port and
largest trans-shipment port in Northeast Asia.
• Port of Incheon (located at the mouth of river Han
just a few kilometers southwest of Seoul).
It is the second biggest port in South Korea that
handles passengers, general cargo, petroleum
goods, LNG, and containers.

11. Sea Port / Airport / Border Terminals through which maximum export
happens
Incheon international airport
• Biggest airport in South Korea.
• It became the world's second-busiest global
cargo hub that handles an average of 3.33
million tons annually.
• Incheon International Airport has 1.28 million
tons of transshipment cargo which is 39% of
the total 3.33 million tons of international air
cargo recorded in 2021.

12. The Foreign exchange position in South Korea
• Foreign Exchange Reserves in South Korea fell to
449300 USD Million in April from 457810.30
USD Million in March of 2022.
1 united states dollar = 1266.97 South Korean
Won.
1 South Korean Won = 0.00079 United States
dollars (20th May).

13. The Balance of Payment position of South Korea
• The current account balance of South Korea
in 2020 is 75.9 Billion.
• The current account balance of South Korea
in 2021 is 88.3 Billion.
• This implies that there is a current account
surplus. That means there is more exports
than imports in goods and services.

14. Dedicated freight corridor
Gyeongbu High-Speed Railway (upgraded from
the Gyeongbu line)
• It is South Korea's first high-speed rail line
from Seoul to Busan operated by KORAIL
trains.
• It is the most heavily traveled rail line where
passenger and freight services are provided.
Korea Strait
• It is a sea passage in East Asia between Korea
and Japan, connecting the East China Sea,
the Yellow Sea, and the East Sea in the
northwest Pacific Ocean.
• The strait is separated by the Tsushima Island
into the Western Channel and the Tsushima
Strait.

15. Current Challenges
• South Korea’s relationship with China perfectly describes the
challenges it faces. If China’s economic growth soars, so did its
share of South Korea’s total exports and vice versa.
• China is giving increasingly tough competition to South Korea by
promoting the emergence of more technologically advanced
industries like electronics, motor vehicles, information technology,
semiconductors, shipbuilding, and high-end steel products.
• Food crisis in Ukraine, Import prices of potato Soars.
In March, the average price of 1 kg of imported potatoes was USD
1.22 (up 20% from a year ago, USD 1.02). It is due to the crops in
North America, Korea's main importer of potatoes, are not good,
and other importers are also restricting food exports in preparation
for a food crisis from Ukraine.
• Weak car exports were caused by constant chip shortages,
lockdowns in China, and the earthquake-induced factory
shutdown in Japan, which worsened the supply disruptions.

16. Future plans
• South Korea is looking to break China's import dependence and
establish supply chain alliances. South Korea is looking forward to
develop closer ties with a range of economies in the Indo-Pacific
• South Korea plans to make a formal application to join the
Comprehensive and Progressive Agreement for Trans-Pacific
Partnership (CPTPP), whose signatories span economies in North
and South America, and countries in the Asia-Pacific.
• The U.S. President Joe Biden visited the Samsung plant in South
Korea and advocated for legislation to boost chip-making.
(20/5/2022)
Biden said the global semiconductor shortage and the Russian-
Ukraine war are leading to higher prices, and the U.S. would work
with close partners like South Korea to strengthen its economy. The
legislation is done to boost chip production and guard against
future interruptions to the supply chain.

17. Suggestions
• Having partnerships with many other countries for imports and
exports by FTA’s and not being reliant/dependent on one country
alone.
• To emphasize the development of modern services industries,
including health care, telecommunications, education, business
processing, and financial and legal services, so that these services can
be exported.
• Efforts to lower product regulations and lower barriers to foreign
investment would boost competition, technological innovation, and
exports.

18. References
AHUJA, R. (2002, April). EXPORT INCENTIVES IN BRAZIL AND KOREA . Retrieved from ICRIER: https://icrier.org/pdf/incentivesBrazil.pdf
Bhattacharjee, S. (2022, April 25). 5 Major Ports in South Korea. Retrieved from Marine Insight:
https://www.marineinsight.com/know-more/5-major-ports-in-south-korea/
Current account balance (BoP, current US$). (2021). Retrieved from World Bank:
https://data.worldbank.org/indicator/BN.CAB.XOKA.CD
Da-jeong, K. (2022, May 16). Food crisis in Ukraine... South Korean domestic potato prices soar. Retrieved from Potato Pro:
https://www.potatopro.com/news/2022/food-crisis-ukraine-south-korean-domestic-potato-prices-soar
Emmott, B. (2010, April 1). South Korea: Finding its place on the world stage. Retrieved from Mckinsey and Company:
https://www.mckinsey.com/featured-insights/asia-pacific/south-korea-finding-its-place-on-the-world-stage
Free Trade Zones. (n.d.). Retrieved from Invest Korea: https://www.investkorea.org/ik-en/cntnts/i-374/web.do
Groppe, M. (2022, May 20). Biden tours Samsung plant in South Korea, advocates for legislation to boost chip making. Retrieved from
USA Today: https://www.usatoday.com/story/news/politics/2022/05/20/biden-south-korea-asia-china-economic-security-
cooperation/9829368002/
Kim, S. (2022, April 1). Korean Exports Rise to Record in March Amid Global Upheavals. Retrieved from Bloomberg:
https://www.bloomberg.com/news/articles/2022-04-01/south-korea-s-exports-remain-resilient-amid-war-in-ukraine
Korea Container Throughput: Export: Busan. (2018). Retrieved from CEIC: https://www.ceicdata.com/en/korea/container-
throughput/container-throughput-export-busan

19. References
Mah, J. S. (2010, October). Export Promotion Policies, Export Composition and Economic. Retrieved from Law and
Development: https://www.lawanddevelopment.net/img/mah.pdf
Regional Comprehensive Economic Partnership (RCEP) agreement to enter into force on 1 January 2022. (2022).
Retrieved from RCEP: https://rcepsec.org/
South Korea - Country Commercial Guide. (2021, 8 14). Retrieved from International Trade Administration:
https://www.trade.gov/country-commercial-guides/south-korea-trade-agreements
South Korea Exports. (2022). Retrieved from Trading Economics: https://tradingeconomics.com/south-korea/exports
South Korea Foreign Exchange Reserves. (2022). Retrieved from Trading Economics:
https://tradingeconomics.com/south-korea/foreign-exchange-
reserves#:~:text=Foreign%20Exchange%20Reserves%20in%20South%20Korea%20averaged%20130448.86%20USD%2
0Million,Million%20in%20April%20of%201972
South Korea Imports. (2022). Retrieved from Trading Economics: https://tradingeconomics.com/south-korea/imports
Yonhap. (2022, April 5). Foreign reserves down in March on fall in dollar-converted asset value, dollar selling to ease
volatility. Retrieved from The Korea Herald: http://www.koreaherald.com/view.php?ud=20220405000181