South Korea Eases Regulations on Petrochemical Sector to Boost Competitiveness

In a significant move to bolster its vital petrochemical sector, the South Korean government has announced a comprehensive deregulation package aimed at enhancing industry competitiveness amidst global oversupply and escalating geopolitical tensions. The Ministry of Trade, Industry and Energy revealed that a new enforcement decree for the Petrochemical Industry Special Act has been approved, designed to facilitate business restructuring and the shift towards high-value-added products.

The core of these reforms lies in lowering regulatory barriers that have historically hindered autonomous business restructuring and facility rationalization. Notably, the new decree grants special exemptions under the Fair Trade Act, permitting previously prohibited information exchange and joint activities among competitors. This is expected to accelerate discussions on facility rationalization across the industry, similar to the recent consolidation of naphtha cracking centers by Lotte Chemical and HD Hyundai Chemical in the Daesan petrochemical complex.

Furthermore, administrative procedures for business transitions will be streamlined, including allowing new corporations to apply for petrochemical export/import business registration even before their official incorporation. Environmental regulations are also being eased, with a temporary suspension of air pollution control facility installation requirements for companies undergoing restructuring. The government emphasizes its commitment to supporting these structural reforms, viewing them as essential for the industry's future, and aims to ensure a smooth implementation of these new measures.

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Restructuring the petrochemical industry to change its constitution is a necessary task, and we will support companies' business restructuring without a hitch based on the institutional foundation prepared this time.