The government is pursuing a plan to increase cash support for foreign-invested corporations. The plan likely involves supporting up to 40% of the foreign investment amount when global corporations establish regional headquarters in the country. The government's aim is to actively induce investment from global corporations and signal that the Korean economy is stable, especially as it focuses on managing external credibility amid political turmoil. This plan is expected to be included in the government's announcement of next year's economic policy direction within the year.
According to the government on the 22nd, the Ministry of Trade, Industry and Energy recently proposed to the Ministry of Strategy and Finance a plan to expand the current 200 billion won cash support budget for foreign-invested corporations. The expansion is necessary to increase the national treasury support ratio for the foreign investment scale, such as regional headquarters or research and development (R&D) centers of global corporations, from the current 30% to about 40%.
Earlier, in January, the government announced this year's economic policy direction, quadrupling the cash support budget for foreign-invested corporations from 50 billion won to 200 billion won. At that time, the Ministry of Trade, Industry and Energy also established an "R&D project exclusively for foreign-invested corporations."
The Ministry of Trade, Industry and Energy and the Ministry of Strategy and Finance are also discussing expanding the support budget for the R&D project exclusively for foreign-invested corporations from the current 3.5 billion won to 10 billion won. It is reported that the Ministry of Strategy and Finance is comprehensively reviewing not only budget expansion but also additional incentives for foreign investment, such as tax support.
The government recently expressed its intention to actively support foreign-invested corporations. This is due to the surge in the won-dollar exchange rate following the emergency martial law situation on the 3rd, along with concerns about a decline in external credibility for the Korean economy.
Choi Sang-mok, Deputy Prime Minister for Economic Affairs and Minister of the Ministry of Strategy and Finance, said at a joint press conference with the foreign minister for foreign correspondents on the 18th, "We will focus on managing external credibility," and "While strengthening incentives for foreign investment, we will enhance the international community's understanding of the solid fundamentals of the Korean economy through events such as the Korea Economic Briefing."
Jeong In-gyo, head of the Trade Negotiation Bureau at the Ministry of Trade, Industry and Energy, also met with the delegation of the American Chamber of Commerce in Korea (AmCham) on the 11th to discuss plans for expanding foreign investment, making Korea the business hub of Asia, and strengthening Korea-U.S. trade cooperation.
A government official explained, "If a lot of foreign capital comes into Korea, it can instill confidence in our economy," adding, "As Deputy Prime Minister Choi has expressed a willingness to support, the Ministry of Strategy and Finance is reviewing foreign investment incentive plans."
These plans are expected to be included in the government's announcement of next year's economic policy direction within the year. However, there are reportedly differing opinions among the bureaus of the Ministry of Strategy and Finance regarding the expansion of the foreign investment support budget. Concerns have been raised about the budget expansion being a financial burden amid a situation where there has been a revenue shortfall for two consecutive years. A government official said, "I have heard that the foreign investment incentive plan will be included in next year's economic policy direction."