The government and the petrochemical industry have signed a voluntary agreement to advance restructuring, including major capacity cuts and a shift toward eco-friendly products.

Industry Minister Kim Jung-kwan said Wednesday that bold and swift restructuring is the only way for the sector to secure future competitiveness, urging companies to act now rather than rely on government aid.

Reflecting industry-led consulting results, petrochemical firms plan to reduce their naphtha cracking capacity by two-point-seven million to three-point-seven million tons and transition toward high-value-added, sustainable products while minimizing the impact on local economies.

Under the agreement, each company will submit a restructuring plan by year’s end, covering facility downsizing, financial improvements and product shifts.

The government said it will review the feasibility of these plans and provide support through financing, tax incentives, R&D and regulatory easing.