SEOUL - In an aim to boost investment in the local economy, the government said it would offer benefits to companies that leave their overseas manufacturing sites to return to Korea.
According to the Ministry of Strategy and Finance and the Ministry of Trade, Industry and Energy on Monday, such returning companies will be allowed access to special economic zones with various site rental and tax benefits.
Under the current system, foreign-invested companies may lease industrial sites in six free economic zones nationwide or other exclusive investment areas. The maximum lease period is 50 years and the average rental fee is 1 per cent of the market price.
"Such real estate benefits will be offered to returning companies, to lower their re-entry barrier," said a government official.
"Most of such companies usually prefer to lease their industrial sites at a low price, rather than purchasing it."
It is, however, uncertain yet whether the same level of tax cuts will be offered.
Foreign-invested firms operating within the exclusive industrial zones may be exempted from corporate and income tax for the first three years, and receive a 50 per cent cut for the following two. The period and the exemption rate may vary, depending on the type of business and sales level.
The admission qualifications for free economic zones will also be alleviated for returning firms.
In order to maintain business within free economic zones, companies have to maintain a minimum export level of 50 per cent of their total sales, but the figure will be adjusted to 30 per cent, officials said.
Also, the Small and Medium Business Administration will increase its budget for helping small companies acquire international certification marks.
So far, the financial support per company was limited to 30 million won ($26,500) on six items over two years, but the limitations will be abolished and the maximum amount will be raised to 50 million won, officials said.
These investment promotion plans are to be submitted to the presidential trade promotion meeting next Thursday, according to officials.