Gov’t to incentivize advanced industry firms’ return home

2024.05.08 08:45:54

[Courtesy of Ministry of Trade, Industry and Energy]이미지 확대

[Courtesy of Ministry of Trade, Industry and Energy]

The South Korean government plans to expand subsidies and widen the range of beneficiaries to incentivize the return of companies in advanced industries such as semiconductors and artificial intelligence (AI), as the competition among countries to attract these industries intensifies in order to secure the supply chain.

Minister of Trade, Industry and Energy Ahn Duk-geun unveiled the initiative on Tuesday during a meeting to discuss support for companies returning home. “Domestic investment by turnaround companies is not only important for promoting exports and employment, but also crucial for the nation‘s economic security, including a stable supply chain,” Ahn said, expressing the government’s determination to facilitate support for such companies by promptly revising relevant laws.

The support entails subsidy payments for capital reshoring, encouraging companies to bring back overseas funds. In 2023, for example, Korean companies such as Samsung Electronics Co. and Hyundai Motor Co. brought back $43.45 billion of overseas earnings to their headquarters in Korea for job creation and capital investment, but received no tax benefits or subsidy support for their turnaround investments. To address this issue, the industry ministry will extend support to include capital reshoring, offering subsidies of 20 billion won ($14.7 million) in the Seoul capital region and 40 billion won in other regions for recognized domestic investments.

But some critics are calling for a more aggressive regulatory relaxation, as well as incentives to attract foreign investment and facilitate reshoring.

By Moon Ji-woong and Chang Iou-chung

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