Hong makes zone more FDI-friendlyThe government is easing the investment process for foreigners at a free economic zone (FEZ) in Incheon and lifting taxes for overseas Korean companies that plan on relocating their manufacturing facilities in Korea, it said.
These measures, aimed at boosting the local economy, were announced by Knowledge Economy Minister Hong Suk-woo yesterday after an emergency economic meeting led by President Lee Myung-bak.
“These measures will help further vitalize the economy,” Hong said at the press briefing. “Although many people worry that economic development in the free economic zone has been lukewarm for the past decade, things are still moving forward and foreign investors recognize this.”
Foreign investors looking to build hospitals or resort complexes in the FEZ some 70 kilometers (43.5 miles) west of Seoul will now be able to get their businesses approved before the facilities they invested in are finished.
Previously, a lack of certainty surrounding whether approval would be granted scared off many foreign investors, Hong said.
“The new measure will give [them] more security and we expect to see them investing more actively,” he added.
Korea received $13.7 billion of foreign direct investment last year. In the first quarter of 2012, FDI from the United States grew 40.6 percent on-year and rose 37.9 percent from the European Union.
Korea was also named eighth on a list showing which countries offer the best investment climate in a World Bank survey last year - its highest rank to date.
A number of foreign casinos including the United States’ Caesars Entertainment are reportedly looking into opening gambling parlors in the FEZ area, but these will be off-limits to Korean guests.
Seoul is also encouraging overseas Korean companies to move here to stimulate the economy. Their corporate and income taxes will be waived for five years if they agree to bring their manufacturing facilities to Korea.
However, the tax exemptions will only apply to those companies that move their facilities outside the Seoul metropolitan area.
“To maintain a level playing field with local companies, we don’t plan on providing any other particular benefit to Korean companies operating factories overseas moving into the metropolitan area,” said Hong.
The moves to lure Korean companies away from foreign shores is part of the government’s move to create more jobs and raise the employment rate, he added.
The ministry surveyed 240 Korean companies operating overseas late last year in cooperation with the Korea Trade-Investment Promotion Agency and the Korea Chamber of Commerce and Industry. Some 30 companies, or 12.5 percent of respondents, expressed interest in bringing their factories to Korea.
Investment in facility manufacturing will jump 4.5 trillion won and spending in R&D will increase 240 billion won after the new measures take effect, according to estimates by the Korea Institute for Industrial Economics and Trade.
By Lee Sun-min [firstname.lastname@example.org]
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