Funding Support for New Construction and Remodeling of Smart Logistics Centers... Up to 150 Billion KRW Over 7 Years

Maximum 2% Point Reduction in Secondary Loan Subsidy Interest Rate
Industrial, Shinhan, Woori, and Hana Banks Offer Continuous Loans

[Asia Economy Reporter Kangwook Cho] When building new smart logistics centers incorporating 4th industrial revolution technologies such as artificial intelligence (AI) and robotics, or upgrading existing logistics centers with advanced technologies, businesses will be able to receive loans with interest rates reduced by 2 percentage points.

The Ministry of Land, Infrastructure and Transport announced on the 31st that it will actively promote an interest subsidy program that supports interest expenses for up to 7 years and up to 150 billion KRW per company to revitalize private investment in smart logistics centers.

The interest subsidy support targets logistics operators who have received smart logistics center certification or preliminary certification. It supports funds needed for constructing, remodeling, or purchasing smart logistics centers, or for upgrading facilities within logistics centers (hereinafter referred to as facility funds), as well as funds required for operating smart logistics centers (hereinafter referred to as operating funds). While providing sufficient funds necessary for building smart logistics centers, a support limit of up to 150 billion KRW per company and scale is set to prevent benefits from concentrating on specific companies or projects.

The interest subsidy rate is determined by the smart logistics center certification grade and company size, with a maximum reduction of up to 2 percentage points. The loan period is set within 7 years for facility funds (including a grace period of up to 2 years, with principal repayment in equal installments four times a year) and within 2 years for operating funds (lump-sum repayment at maturity).

Considering this year’s support budget, the Ministry expects that loan support exceeding approximately 1 trillion KRW will be possible this year. Additionally, depending on future budget conditions, the ministry plans to consider expanding the eligible recipients beyond logistics operators under the Basic Logistics Act.

To receive interest subsidy support, applicants must first obtain ‘Smart Logistics Center Certification’ from the Korea Transport Institute, the certification body. Then, by submitting the certification or preliminary certification and the interest subsidy support confirmation letter, they can undergo loan screening at one of four handling banks: Korea Development Bank, Shinhan Bank Co., Ltd., Woori Bank Co., Ltd., and Hana Bank Co., Ltd. Once approved for interest subsidy support, the company only pays the interest amount corresponding to the actual burden rate, which is the loan interest rate calculated by the bank minus the government’s interest subsidy rate, to the lending bank.

Companies receiving interest subsidy benefits must ① conclude related contracts such as construction, purchase, or equipment acquisition within 6 months after loan approval and submit them to the bank, ② if supported based on preliminary certification, apply for full certification within 1 year after building use approval under the Building Act, and ③ maintain certification until the loan repayment date.

If obligations are not met or funds are used for purposes other than intended, the support funds will be reclaimed. Furthermore, interest subsidy support may be suspended according to relevant regulations if the recipient becomes ineligible, sells or transfers the certified logistics center, experiences a downgrade of two or more certification grades, or if the total floor area of the certified logistics center significantly decreases.

Osongcheon, Director of the Advanced Logistics Division at the Ministry of Land, Infrastructure and Transport, stated, "For our logistics industry to achieve global competitiveness through advancement and automation, active private investment is paramount. The government plans to continuously expand support to back private sector efforts."

This content was produced with the assistance of AI translation services.