The fixed-limit method for subsidies to "reshoring corporations" that returned to Korea after expanding overseas will be abolished, and a system will be introduced in which the government and corporations negotiate directly to decide the level of support. The requirement that the industry must be the same to qualify for reshoring will also be greatly relaxed, so even if they switch to a different field from their overseas business, they can be recognized as returning corporations if factors such as supply chain relatedness are similar.
The Ministry of Trade, Industry and Resources announced the "domestic return (reshoring) re-establishment and promotion plan" at the economic ministers' meeting on the 29th.
The government moved to overhaul the system because the number of reshoring corporations is declining. Selections fell from 23 corporations in 2022 to 14 last year. The judgment is that incentives suited to changes in the investment environment, such as supply chain reorganization, are needed.
Under the current reshoring system, products and services produced at overseas business sites and at domestic return business sites must be the same or similar under the Korean Standard Industrial Classification mid-level category to be recognized as reshoring. Because of this, corporations that produced auto parts overseas were not recognized as reshoring when, after returning, they made energy storage system (ESS) parts or invested in research and development (R&D) facilities in Korea instead of producing products.
Through revisions to the enforcement decree, the government will add function and use, core technology, and supply chain relatedness to the similarity criteria and operate the system flexibly. In the advanced and supply chain fields, when corporations invest in "mother factories," core production facilities, in Korea, they will be able to be recognized as reshoring even without scaling down their overseas business sites.
The subsidy support method will also be overhauled. Previously, subsidy rates were automatically determined by industry and region-specific calculation tables, but going forward, a "negotiation track" will be established in which the government and corporations negotiate directly to decide the level of support for advanced strategic sectors or large-scale investments of 100 billion won or more. The fixed support limit of 30 billion won per investment case (40 billion won for advanced sectors) will be switched to an upper-limit rate method, removing obstacles to attracting large-scale investment in the provinces.
In the negotiation process, the government plans to determine the level of support by comprehensively evaluating whether the investment is outside the Seoul metropolitan area, the scale of youth employment, whether it falls under advanced strategic technologies, and contributions to the supply chain. In effect, the system will be revised so that the more it is a provincial investment or an advanced industry, the more subsidies it can receive.
In addition, at the reshoring corporation selection stage, the government will strengthen reviews of the specificity of investment plans and execution capacity, and will establish a system that assigns a project manager (PM) to each investment project to provide close support throughout the entire process from investment review to follow-up management. A "reshoring investment support team" that includes relevant ministries, local governments, and industry will also be formed to hear corporations' difficulties quarterly.
Legal maintenance, including revisions to the enforcement decree for this plan, will be promoted in the second half of this year, with full implementation starting next year.