Gov’t commits $27.4 billion to boost investmentThe government on Sunday announced details of a 30 trillion won ($27.4 billion) program to promote investment in new growth engines and in large infrastructure projects.
If the government’s plan to impose new taxes on companies for hoarding cash has been likened to a “stick,” the latest investment promotion program can be considered a “carrot,” according to a government official.
The program was coordinated by the Ministry of Finance and Strategy, Ministry of Trade, Industry and Energy, and Financial Services Commission. State-run Korea Development Bank (KDB) will support the program by providing 15 trillion won that can be used to purchase shares and bonds in specific projects.
The government program will help reduce risks for companies, since the injection of funds will be in the form of investments, not loans.
“Small and medium enterprises and large businesses all can take advantage of the program to push forward various projects,” said the Finance Ministry in a press release.
Previous government support programs were mostly for small businesses, but the newest one is aimed at large corporations that have been hesitant to make new investments. The average facility investment growth declined from 4.9 percent annually from 2002-11 to 1.5 percent from 2012-14.
Also, it is the first time the government has came up with a 30 trillion won program aimed to encourage investment by all businesses,large and small. Previously, noticeable investment promotion programs were 3 trillion to 5 trillion won.
“In a nutshell, what the government is trying to do is to induce large-scale investment projects,” said Kim Byung-hwan, an official at the Finance Ministry.
Through the new program, the government is planning to encourage investment in new growth engine industries such as medicine, tourism, software, logistics and content, as well as core businesses like semiconductors, automobiles, shipbuilding, machinery, steel and petrochemicals.
Large infrastructure and construction projects also can apply for investment support.
Research and development projects and mergers and acquisition deals that aim to streamline business operations and improve efficiency are eligible to get support from KDB, the ministry said.
Businesses already have requested 5 trillion won from the KDB, even before the program kicks off today.
LG CNS asked for some funds to build ecofriendly power plants on Ulleung Island.
Hyosung did so for a polyketone plant. Kumho Industrial applied for funds to construct an express way connecting Icheon and Osan.
BY SONG SU-HYUN [firstname.lastname@example.org]
More in Economy
Gangbuk beats Gangnam
600,000 jobs added last year, but many public or welfare
Consumer price gains pick up speed in November
Life expectancy up 7 months for Koreans born in 2019
OECD knocks tenth of a point off Korea's 2020 growth