South Korea's finance chief has expressed concern about the damage local firms could face over Japan's exclusion of South Korea from its "whitelist" of nations given preferential treatment in export procedures.

In a report submitted to the National Assembly on Monday, Finance Minister Hong Nam-ki said Tokyo's removal is expected to take a toll on South Korean firms in the areas of advanced materials, electronics and communications.

The remarks come as the Shinzo Abe administration is preparing to seek cabinet approval to remove South Korea from its whitelist of 27 countries as early as Friday, requiring South Korean firms to seek Tokyo's approval for each export product.

Hong said Seoul is considering all possible scenarios and related ministries are closely coordinating on response measures.

The minister also vowed to minimize the scope of potential damage through import diversification, domestic production expansion, localization and the simplification of regulatory procedures.