Manufacturing subsidies pass with broad support

Hwang’s policy initiative popular despite Xiomera sanctions as Haesanite economy rebounds

By Economics Correspondent Jeong Yu-na

HWAGANG/SUYANG: Prime Minister Sabrina Hwang’s initiative to provide subsidies to manufacturing sectors along with further incentives for those starting or reorganizing manufacturing businesses in Special Economic Zones (SEZs) has passed in the National Assembly by a sizeable margin. Over 300 deputies ultimately supported the legislation, which seeks to revamp an industry which has struggled to restructure after shocks related to the ongoing Golden Blade Insurgency and heightened Haesan-Xiomera tensions.

After the economic crisis earlier this month, the Haesanite economy has largely rebounded as the banking sector has stabilized, but the manufacturing sector was the hardest hit, with many major Haesanite firms heavily reliant on imports from Xiomera. As a result, in recent weeks, many smaller manufacturing firms with key supply lines from Xiomera have declared bankruptcy, and the few Xiomeran firms listed on the Suyang Stock Exchange have been forced to shutter their Haesanite operations over precipitously declining share prices wiping out over 90% of their value. However, the HMIX index has only dropped about 3.2% since the start of the crisis as losses in the manufacturing sector have been offset by a “shift to value” and staple stocks like Seollim Group, Suri Heavy Industry, and consumer goods giant Jeongmi have seen their stock prices rise in the ensuing weeks. Many mid-sized manufacturing companies have seen their stocks rebound after swearing off Xiomeran inputs, while the defense sector has seen boosts from major deals with Huenya and Aredoa. Currently, this has led to an impressive rebound, as HMIX bottomed out at 18.9% below its October 1 price, enough for the crisis to be labeled an “economic correction.”

The government intends to auction off the assets of the bankrupted companies over the coming weeks, and Hwang’s subsidies are seen as an incentive to make their purchase more appealing at a time when the industry is struggling to shift fully away from the Xiomeran components that put it at risk in the first place. Further complicating the issue is the fact that this initiative will be funded by a blanket 5% import tariff on all Xiomeran goods, in the first major breach of the two nations’ major free trade agreement. PM Hwang called these tariffs necessary due to “the Haesanite promise to the international community to act on Xiomera’s needless and harmful interventions in Roucourt.” She continued that “while other nations have failed in their promises on the LIDUN floor, Haesan needs to prove that we are a leader in ensuring states’ ability to determine their own destinies.” Additionally, Haesan-Xiomera bilateral trade has declined precipitously since the start of the crash as investors and businesses on both sides of the Promethean Sea grow wary of trusting the other too much after Haesan’s alignment with Huenya over the Golden Blade continues to make political waves.

Another cause of concern for the government is the potential wave of ethnically Xiomeran workers who may be applying for citizenship in the coming weeks. Xiomeran manufacturing centers in SEZs were often notorious for importing Xiomeran labor and keeping them under close surveillance. With the collapse of many large Xiomeran operations in the nation over recent weeks, it is unclear whether Xiomeran firms will pay their way for their workers’ return to Xiomera, or whether they will be allowed to naturalize in Haesan. The governors of Namhae, Imyu, Ryujang, and Yeongnam have established a “Southeastern Plan” in recent weeks to coordinate a response on immigration and the asset seizure of bankrupt factories as their provinces contain the vast majority of SEZs and have been hardest hit by the recent economic correction. The federal response on immigration has been muted so far.

Hwang’s policy has been labeled by political scientists as part of a broader, intentional “de-Xiomerification of the Haesanite economy,” that is a coordinated effort from both the legislative and executive branches of government. Professor of Economics at Seohae University Yoo Cheon-ho told the Times-Courier that “Haesanite dependence on Xiomeran goods, and before that, Xiomeran debt, has long plagued the government. To be reliant on such a reliably problematic international actor for so much of our economic activity always left us vulnerable to these kinds of shocks, and shifting to nations like Slokais and High Fells in the short term while we build up our own capacity for the kinds of manufactured parts we need will obviously be painful in the short run, but will prevent major headaches in the long term.” Many in academia share Yoo’s view, as well as much of the public, which continues to approve of the government’s support of Huenya after major protests rocked the country after its inaction. Optimism and resolve are the words of the moment both in Assembly Square and on Bay Street as Haesan seeks to further rebound and continue its rapid pace of economic growth.