Semiconductor, AI, and U-turn Companies Can Enter Free Trade Zones if Export Ratio Reaches 30%

Resolution of the Amendment to the Enforcement Decree of the 'Free Trade Zone Act' at the Cabinet Meeting

[Sejong=Asia Economy Reporter Joo Sang-don] Advanced companies such as semiconductors and artificial intelligence (AI), as well as returnee companies, can now enter free trade zones if they meet only a 30% export ratio requirement, similar to foreign-invested companies.

The Ministry of Trade, Industry and Energy announced that the partial amendment to the "Enforcement Decree of the Act on Designation and Operation of Free Trade Zones," which includes this content, was approved at the Cabinet meeting on the 6th and is scheduled to take effect from the 13th.

Introduced in 1970 as an export forward base, Free Trade Zones (FTZs) have contributed to national economic development through export expansion and attraction of foreign investment.

However, as the dynamism of FTZs has weakened due to rapidly changing domestic and international environments, the government announced the "Free Trade Zone Innovation Strategy" last November to enable free trade zones to leap forward as "advanced export and investment hubs." This amendment to the enforcement decree is a follow-up measure to relax the entry qualifications (export ratio) to attract core industries leading the regional economy, such as advanced and returnee industries, to the traditionally manufacturing and logistics-centered free trade zones.

Currently, companies entering free trade zones must have an export ratio of 50% or more (40% for mid-sized companies, 30% for small and medium-sized enterprises). This has been relaxed so that advanced companies and returnee companies related to 2,990 technologies and products in 33 fields of manufacturing (such as semiconductors) and non-manufacturing (such as artificial intelligence) can enter if they meet only a 30% export ratio (20% for small and medium-sized enterprises).

An Seong-il, head of the Economic Free Zone Planning Division, said, "Since the relaxation of entry qualifications for startup companies in 2019, 15 startup companies have entered free trade zones and contributed to exports," adding, "We will actively attract advanced and returnee companies to free trade zones through this amendment to the enforcement decree to strengthen manufacturing competitiveness and lead to increased exports and revitalization of the regional economy."

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