CEOs urged to increase investmentPreparing for a tough financial year ahead, the government has urged CEOs of foreign company to expand investment in Korea, offering additional financial assistance and eased regulations if they spend in new business areas.
“Amid difficult economic situations across the globe, I think that Korea is an attractive investment destination thanks to a decent 3.1 percent growth forecast for this year,” Minister of Trade, Industry and Energy Joo Hyung-hwan said at a meeting with foreign investment company CEOs in central Seoul on Thursday.
“The recently passed One-Shot Act will also bring new investment opportunities for your companies [by making mergers and acquisitions easier].”
Attendees included heads of the American Chamber of Commerce and European Chamber of Commerce in Korea, as well as 20 CEOs of companies with Korean branches, including Solvay, Renault Samsung Motors, Qualcomm, Ikea and Otis Elevator.
Joo encouraged them to expand their businesses in Korea this year and help the country break last year’s record-high foreign direct investment total of $20 billion. The government said it will strengthen its national defense so that the risk from North Korea will not make foreign firms hesitate about expanding in Seoul.
He promised that the government will cut rental costs on land and other facilities when they expand production or R&D facilities and will also expand subsidies on R&D projects, if the foreign firms invest in the new business areas. Local conglomerates recently announced they would invest some 44 trillion won ($36 billion) on developments including smart cars, drones, energy management, bio-health and new materials.
The CEOs asked the government to ease customs procedures, allow more sectors to enter free economic zones and expand tax breaks on more sectors. Of 17 demands, the government agreed to revise rules in eight areas.
If it proves to be effective in job creation, the Trade Ministry will partially allow service industries, including rental businesses specializing in electronic and IT devices and power generation machines, to enter free economic zones nationwide.
Tax exemption on high-tech industries will be expanded in more sectors, considering that current tax codes are old, the Ministry of Strategy and Finance said.
The Ministry of Justice will work on extending the real estate immigration act, which grants a green card to foreigners who invest a certain amount of money in local golf courses, leisure complexes or hotels. The act was initially scheduled to be phased out in 2018. A decision will be made before July.
Production by more than 10,000 foreign companies in Korea accounted for 18 percent of the nation’s annual exports as of 2011. They accounted for 6 percent of national employment and 10 percent of the nation’s value-added product production, according to the Trade Ministry.
BY KIM JI-YOON [firstname.lastname@example.org]
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