First Vice Finance Minister Lee Hyoung-il, center, speaks during a briefing on deregulatory measures aimed at easing supply bottlenecks caused by the Middle East conflict, at Government Complex Seoul, Friday. Yonhap
Korea will temporarily exempt additional shipping costs from tariffs on Middle East imports rerouted due to disruptions in the Strait of Hormuz, the government said Friday, as concerns mount over raw material shortages.
The government will also fast-track customs clearance for key energy and raw materials to ease supply bottlenecks.
The measures are part of a broader deregulatory package announced by the Ministry of Economy and Finance, in coordination with other agencies such as the industry ministry and Korea Customs Service, aimed at stabilizing supply chains without additional fiscal spending.
“The government will exclude additional shipping costs caused by detours around the Strait of Hormuz from import duty calculations, easing the burden on importers,” First Vice Finance Minister Lee Hyoung-il said during a briefing.
Officials said the changes will be reflected in a planned revision to the enforcement decree of the Customs Act next week, and will be applied retroactively to shipments already affected by sharp increases in freight costs.
The decision comes as freight rates have surged following disruptions in the Strait of Hormuz resulting from the Iran conflict. The Worldscale index, an international system for calculating tanker freight rates between the Middle East and China, stood at 426.89 in March, up 608 percent from 60.3 a year earlier.
Authorities will also allow pre-arrival customs clearance for crude oil, naphtha and other key imports, so they can be put into manufacturing immediately upon arrival.
“For chemical substances facing supply risks, such as paint materials, we will allow companies to replace full hazard testing data with testing plans when registering imports, which would significantly shorten the process that typically takes more than three months,” Lee said.
Trash bags are produced at a factory in Incheon, Friday. Yonhap
Separately, the government will ease labeling rules for food and sanitary products to allow faster use of alternative packaging materials, permitting required information to be provided via stickers instead of direct printing on packaging. The measure is expected to ease the burden on manufacturers facing packaging shortages.
Authorities will also move to swiftly secure supplies of trash bags used for household waste disposal, which have seen panic buying in recent weeks amid shortage concerns.
Quality inspection periods for the garbage bags will be shortened to one day from 10 days, and a more efficient redistribution system among local governments will be introduced.
Officials said these temporary measures will be rolled back once the situation stabilizes, along with a review of their effectiveness and potential side effects.
The series of deregulatory measures comes as concerns mount over raw material shortages, particularly in naphtha supply, amid the prolonged Iran war.
Naphtha, derived from crude oil, is a key feedstock used to produce basic petrochemicals such as ethylene and propylene, which are widely used in plastics, packaging, synthetic fibers and rubber.
Korea imports about 45 percent of its naphtha, with roughly 77 percent sourced from the Middle East.
Finance Minister Koo Yun-cheol urged related ministries to step up efforts to address economic risks stemming from the Iran war.
“We will assign officials to monitor key supply chain and price-sensitive items on a daily basis, while sharing developments through a ministerial hotline system to ensure swift responses,” he said during a ministerial meeting earlier in the day.
“We will also prepare additional measures to address potential constraints on consumption stemming from the Middle East conflict and energy-saving efforts,” he added.