Government Focuses on Foreign Investment in Supply Chains and Carbon Neutrality... Up to 50% Cash Support

President Moon to Host 'Dialogue with Foreign Investment Entrepreneurs' on 17th
Last Year's Foreign Investment Hits Record High of $29.5 Billion
Tax Credit Strengthened for Semiconductor, Secondary Battery, and Vaccine Investments

President Moon Jae-in Engages in Conversation with Foreign-Invested Company Executives
(Seoul=Yonhap News) Reporter Ahn Jung-won = President Moon Jae-in is attending and speaking at a dialogue with foreign-invested company executives held at the Blue House State Guest House on the morning of the 17th. 2022.2.17
jeong@yna.co.kr
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[Asia Economy Sejong=Reporter Lee Jun-hyung] As South Korea's foreign investment attraction performance reached an all-time high last year, the government has stepped up its strategy to attract foreign investment.

According to the Ministry of Trade, Industry and Energy on the 17th, the government held a 'Dialogue with Foreign-Invested Businesspeople' chaired by President Moon Jae-in at the Blue House State Guest House on the same day. This meeting was organized to express gratitude and encouragement to foreign-invested businesspeople. The 24 companies invited to the meeting included Korea Pfizer, IKEA Korea, and Bank of China. This was the second time President Moon met with foreign-invested businesspeople since March 2019.

The reason President Moon personally took the lead in encouraging foreign-invested businesspeople is due to foreign investment exceeding $20 billion for five consecutive years. Last year, foreign investment surpassed $29.5 billion, setting a new record. Last month, foreign investment amounted to $1.567 billion, a 92.5% increase compared to the same month last year ($814 million).

Foreign investment in the Korean New Deal also steadily increased. The proportion of foreign investment in the Korean New Deal sector rose from 9.7% in 2017 to 28.7% last year, an increase of 19 percentage points.

Number of Foreign-Invested Corporations and Reported Amount Trends.
[Photo by Ministry of Trade, Industry and Energy]

It is also evaluated as contributing to domestic economic growth and job creation. According to the Ministry of Trade, Industry and Energy, as of 2020, foreign-invested companies accounted for 10.9% of total domestic sales and 5.4% of employment.

Accordingly, the government is also improving the investment environment. Cash support for foreign investment is a representative example. The cash support budget, which was 10 billion KRW in 2017, has increased to 50 billion KRW this year. The government has extended tax incentives, such as applying a single tax rate of 19% to foreign workers until 2023. The Foreign Investment Ombudsman handled 1,609 grievances from 2017 to last year.

The government identified 'supply chain' and 'carbon neutrality' as key words for future foreign investment attraction strategies. On this day, Minister of Industry Moon Seung-wook announced the '2022 Foreign Investment Policy Direction,' stating that support for foreign investment related to supply chains and carbon neutrality will be strengthened.

First, the government will provide cash support up to 50% of the investment amount, the maximum limit, for foreign investment related to supply chain stabilization. Investments related to carbon neutrality will receive additional support funds. A total of 32.1 billion KRW will be provided for location support such as rent reductions. A 100% reduction rate will be applied to investments related to supply chain stabilization and carbon neutrality.

President Moon Jae-in Engages in Conversation with Foreign-Invested Company Executives
(Seoul=Yonhap News) Photo by Ahn Jung-won = President Moon Jae-in is attending and speaking at a dialogue with foreign-invested company executives held at the Blue House State Guest House on the morning of the 17th. 2022.2.17

The number of new growth source technology items eligible for facility and research and development (R&D) investment tax credits will increase from 45 to 65. Enhanced tax credit limits will apply to foreign investment in national strategic technologies such as semiconductors, secondary batteries, and vaccines. In addition, the number of specialized personnel handling grievances at the Foreign Investment Ombudsman Office will increase from 14 to 19, and the number of advisory committee members for labor, environment, etc., will increase from 19 to 50. Communication with foreign-invested companies will also be strengthened through consultative bodies such as the 'Foreign Investment Advisory Group,' chaired by the head of the Ministry of Trade, Industry and Energy's Trade Negotiation Headquarters. Furthermore, government-level investment attraction activities will be carried out in strategic sectors such as BIG3, carbon neutrality, and the hydrogen economy.

Meanwhile, foreign-invested businesspeople attending the meeting suggested simplifying import customs and immigration procedures and expanding incentives.

Minister Moon said, "We will continue efforts to improve support systems and the investment environment this year to expand foreign investment attraction and facilitate smooth domestic management activities of foreign-invested companies," adding, "We will actively review the suggestions of foreign-invested businesspeople through discussions with relevant ministries."

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