South Korea’s financial authorities said Wednesday they plan to launch a consultative body by the end of the month to help local firms seeking mergers and acquisitions that could reduce the country’s dependency on imported materials from Japan.

The plan is in line with the government’s contingency plans -- announced a few days ago in response to Japan’s decision to remove Korea from its list of trusted trade partners -- including financial support for firms eyeing a foray into the materials, parts and equipment sectors or seeking the acquisition of new technologies. 

According to the policymaking Financial Services Commission, it plans to jointly establish the special committee with three state-run banks -- the Korea Development Bank, Export-Import Bank of Korea and Industrial Bank of Korea.

Local branches of global investment banks have also agreed to participate, an FSC official said, to provide foreign outsourcing for firms that need M&A services overseas.

The consultative body will be tasked with providing financial aid and consulting services for firms.

The IBK and Korea Eximbank will allocate 1 trillion won ($822.4 million) and 1.5 trillion won, respectively, to finance the M&A exercises, while the KDB will fund 2.5 trillion won to boost competitiveness of the sectors.

Firms acquiring overseas materials, parts or equipment businesses will also receive tax support until the end of 2022. A corporate tax credit of 5 percent will be offered to large firms or conglomerates, while small and medium-sized enterprises will be provided with 10 percent. 

By Jung Min-kyung (mkjung@heraldcorp.com)