5 regions to receive aid packageThe government on Tuesday designated five regions in Korea as industrial crisis zones, which will give big tax breaks and hiring incentives to companies in the areas.
Five regions, including Dong District in Ulsan and Geoje and Changwon’s Jinhae District in South Gyeongsang, were picked as “special areas for responding to the industrial crisis” during a meeting of economic ministers at the Seoul government complex on Tuesday.
“The decision to designate these areas as emergency response zones is reflective of the government’s will to not only stabilize the employment [crisis] there but also help the local economies recover as soon as possible,” said Paik Un-gyu, the minister for trade, industry and energy, during the meeting.
The designated areas, which will receive support from the government for a year, are home to Korea’s major shipyards and their suppliers. Dong District in Ulsan is where Hyundai Heavy Industries and many of its suppliers are located. Geoje is home to Daewoo Shipbuilding and Marine Engineering, and STX Offshore & Shipbuilding is located in Changwon’s Jinhae District. All these shipbuilders are undergoing massive overhauls due to prolonged stagnation in the global shipbuilding industry.
“The government will provide financial support and tax breaks to private companies so that they have incentives to run factories in these regions,” said Park Gun-su, deputy minister for industrial policy at the Trade Ministry, during a media briefing.
For instance, a company that hires workers who were laid off from their previous jobs due to restructuring would receive as much as 30 million won ($27,870) per worker for a year, the government official explained. Companies who continue to operate in those regions would also receive corporate tax breaks of up to 100 percent for the next five years.
Park said that funding for emergency projects, such as the regional relief efforts, is already included in the supplementary budget plan passed earlier this month. He added that if necessary, the government will allot an additional 50 billion won from the reserve fund for the plan.
The National Assembly passed a 3.8 trillion won supplementary budget bill on May 21, with 1 trillion won earmarked for hard-hit regions.
The supplementary budget also includes funding for infrastructure development in the hard-hit regions. The government plans to spend 40 billion won on developing roads and 25 billion won on tourism-related projects.
The government’s regional assistance policy was first approved last year. Gunsan, in North Jeolla, home to a suspended GM Korea manufacturing plant and a Hyundai Heavy Industries’ shipyard that closed down last year, was the first beneficiary of the policy in April of this year. Park denied allegations that the government’s decision to expand the policy was made in order to gain votes in the upcoming general election set for June 13.
“It has nothing to do with that,” Park said. The five regions were already chosen as employment crisis zones in April. “We limited the period of support to one year instead of two given the recent signs of recovery in shipbuilding.”
BY CHOI HYUNG-JO [email@example.com]