Call for Restructuring Imports

KOIMA Chmn. Kim: "Move will help increase exports and strengthen economy by increasing trade surplus"

Chairman Kim Wan-hee of the Korea Importers Association (KOIMA), said international trade, especially imports, needs to be restructured in order to bring about an increase in exports, whose importance has never been greater than now as a means to turn the economy around as a trade surplus is needed more than ever to increase the foreign exchange reserve. In a recent exclusive interview with NewsWorld, Dr. Kim said importers have to bring into the country inexpensive, yet quality raw materials and commodities as an increase in exports can only be realized when Korean products are competitive not only in quality but also in price. Kim has only one year left before his term of office expires, but he is as busy as ever. He recently hosted a meeting with foreign diplomats stationed in Seoul. In May, the association will hold an importers exhibition and dispatch a buying mission to China and Europe (Italy, Turkey and Egypt).
Chairman Kim is a martial arts expert. He is the first Korean martial artist ever to end a match in a draw with Chin Sowang, the 19th generation martial artist from the House of Chin, the home of the Taeguk Martial Art, the most well known martial art style in China. Kim invited Chin to Korea seven years ago. But since becoming the chairman of KOIMA, he never has enough time to practice martial arts.
The government and local autonomous entities have been very supportive of increasing exports. In March, the trade surplus reached $4.61 billion, the largest in history, as imports fell by 21.2 percent due to the steep depreciation of the Korean currency and the global economic downturn. The exchange rate with the U.S. dollar shows the Korean won gaining strength. Imports are expected to increase with China and emerging economies seeing the beginning of a recovery in their economic growth rate and raw material prices have again begun to climb due to an increase in demand. The chairman expects Korean imports will also begin to increase, cutting the trade surplus.

Kim said the importers think 1,200 won to the U.S. dollar is the most ideal exchange rate for the Korean currency, which will happen in the second half to recover import growth. He said import growth doesn't always mean that it will hurt the trade balance, as importers will try to import good quality and inexpensive raw materials and other goods so that Korean export goods will be more competitive.
Question: What are the major functions of KOIMA?
Answer: It is a representative Korean economic organization set up in the 1970s to prevent the rampant import of foreign goods, and only those that will help boost exports in a timely basis, making a contribution to the growth of the national economy. The association now has over 10,000 import firms who are dedicated to importing inexpensive goods and yet price competitive foreign goods to help expand Korean exports through their price and quality competitiveness.
As Korean exports grow to reach the level of 12th largest exporter in the world, many foreign countries want Korea to import more of their goods, which is why KOIMA has been sending buying missions to foreign countries -- about 12 annually -- and holds import consultations with foreign embassies in Seoul four or five times a year. KOIMA also holds the only import goods exhibition annually in Korea, playing the role of civilian diplomat to prevent trade conflicts and smooth out export barriers. The association also recommends import policy or regulation changes to the government for the sake of importers.
Q: What are some of the measures to help importers hurt badly by the high depreciation of the Korean won?
A: KOIMA has been asking for government help for those importers on a continuous basis. As a result, importers have been allowed to use the foreign exchange rate change insurance and it has also been recommending to the government to allow SME importers access to funds and cuts in customs charges and warehouse storage fees and an improvement in import processes. This year, KOIMA will open an import support center to help SME importers to stand on their own feet through KOIMA's advice and consultations.
Q: Korea is a resource poor country and, therefore, has to import many raw materials. Why do people have a negative view on importing foreign materials into the country?
A: We are poor in natural resources and have an industrial structure requiring raw materials and parts from overseas. The breakdown of imports last year showed that raw materials accounted for 62.4 percent of total imports with 28.3 percent of imports being capital goods. More than 40 percent of the imported raw materials were eventually exported as finished products.
It is regrettable that many people still believe that imports of foreign goods are a waste of valuable foreign exchange, although imports have been a critical factor in our economy. We have to help importers with government policies so that they can import good quality goods at inexpensive prices and correct prejudiced views that many people have against imports of goods.
Q: When supports are given to importers, won't they reduce the trade surplus, exacerbating the trade balance?
A: What has made Korea's economy grow to such an extent as to be ranked the 12th in the world has been processing trade. When we look at the figures, export increases have resulted in increases in imports, too, and vice versa. When imports increase, exports increase. We have been calling for support to SME importers to enhance their competitive edge abroad so they can contribute to industrial development through the effective imports of goods.
We have to revise unnecessary regulations and laws courageously and reduce tariffs on goods that have to be imported, which will reduce imports and increase the trade surplus.
Q: Imports decreased substantially in 2008, the largest drop since the financial crisis in 1998. What are the prospects for imports in years ahead?
A: As you well know, both exports and imports declined, with imports falling more than exports due to reduced prices and demand. Such conditions will continue throughout the first half of 2009. In the second half of the year, raw material prices and other import commodities will rise as China and emerging countries lead the economic recovery, along with a resurgence in construction projects in the Middle East. When the global economy recovers and export markets begin clicking, imports will also rise.
Q: What is your advice to the import community in overcoming the current crisis?
A: We, the import community, made a contribution to lay the foundation for the national economic takeoff in the '60s and '70s by importing foreign technologies and superb raw materials and parts on a stable basis. We went everywhere in the world to find good materials, braving all kinds of problems to supply the necessary raw materials and parts for the industry, and occasionally dispatched civilian diplomatic missions to resolve trade conflicts, working hard to ensure smooth trade relations. The importers grew along with the national economy through such efforts and we expect we will have a lot to do when the economy gets back on track. We are certain that the government will change its traditional views on importers. KOIMA will be a bridge between the import industry and the government and will recommend to the government what it can do to support the importers through diversified policies so that they might resolve their problems.
Q: What are your plans with only a year to go in your term of office?
A: In the past couple of years, I tried to lead KOIMA to cope with the rapidly changing international environment and get ahead of them successfully by making sure the association was up to its tasks. The changed KOIMA will make this year the initial year to lead the import industry as a contributor to the development of the national economy. I plan to take care of a number of major tasks related to what I just said.
First of all, I plan to strengthen the R&D activities of small importers so that they can collect information on the trends of global markets and effectively cope with changing trends. KOIMA has been providing the KOIMA Index on prices of key raw materials in the international market since 1996, but the items have been limited to 30 products. I will work to increase the number to 70-100 and provide market conditions in important import market countries. I will also have small- and medium-sized importers report their problems to the support center so that they will have an easier time importing foreign products and to help them solve their problems in such areas as drawing up import contracts, the process of import, customs clearance and the settlement of import costs, free of charge. nw

Chairman Kim Wan-hee of the Korea Importers Association.

Photos showing busy schedules of Chairman Kim Wan-hee meeting with many foreign leaders associated with imports and attending meetings to discuss trade matters both at home and abroad.Government.