'Semiconductor Special Act' Submitted to Industry Committee 47 Days After Proposal... Pre-Feasibility Study and Balanced Development Issues

Full-Scale Discussion on the Amendment to the National Advanced Industry Act
Review Report: "Rapid Development of National Industrial Complexes Possible... Concerns Over Hindering Balanced Development"
Discussion on the Amendment to the Special Taxation Act, Including the K-Chips Act, Expected to Be Difficult

[Asia Economy Reporter Koo Chae-eun] The "National Advanced Strategic Industry Act Amendment (commonly known as the K-Chips Act)" aimed at fostering the semiconductor industry was submitted to the Industry, Trade, and Small and Medium Enterprises Committee on the 19th. This came 47 days after the bill was proposed. However, due to the large scale of support required and the many related ministries that need to cooperate, a difficult path to passage is expected. Since the bill’s effectiveness depends on being linked with the amendment to the Restriction of Special Taxation Act for tax support, cooperation from the Planning and Finance Committee is also necessary.

On the 19th, the Industry Committee held a plenary session and submitted the National Advanced Strategic Industry Act amendment, which was primarily proposed by independent lawmaker Yang Hyang-ja. Initially, the bill was not submitted to the plenary session on the 1st due to the need for a deliberation period. However, continuous demands from academia and industry led to its submission on this day.

The amendment to the National Advanced Strategic Industry Act submitted to the Industry Committee includes ▲ granting authority to establish specialized complexes by the National Advanced Strategic Industry Committee ▲ expanding the scope of preliminary feasibility study exemptions ▲ increasing university quotas in advanced fields ▲ expedited processing and shortened periods for permits and approvals ▲ authority to designate high schools tailored to industrial demand, among others.

Once the amendment is submitted to the plenary session, it will be reviewed by the Industry, Trade, and Intellectual Property Subcommittee. The subcommittee review process is expected to include additional coordination and consultation among ministries. The core of the bill is not only the ‘designation’ and ‘revocation’ of specialized complexes (clusters) but also granting the state the authority to establish them, which requires consultation with local governments and the Ministry of the Interior and Safety. Kim Han-jung, chairman of the Industry, Trade, and Intellectual Property Subcommittee and a member of the Democratic Party, told Asia Economy in a phone interview, "Exemption from preliminary feasibility studies requires consent from the Ministry of Strategy and Finance, and expanding university quotas also requires discussions with academia," adding, "Since there are many stakeholders involved, there are many things to coordinate, so we will gather opinions while reviewing the bill."

For now, the National Assembly’s review report evaluated that if specialized complexes are designated as national industrial complexes, rapid establishment would be possible. Lee Sang-heon, senior expert of the Industry Committee, stated in the report, "The Minister of Land, Infrastructure and Transport becomes the coordinating authority for permits related to infrastructure installation, making consultations with relevant local governments advantageous, and public institutions such as the Korea Land and Housing Corporation (LH), which have extensive experience in industrial complex development, become project implementers, facilitating smooth resolution of complaints and land acquisition." However, he added, "There are concerns from the perspective of national balanced development and regional development because the semiconductor industry is requesting the establishment of national industrial complexes in the metropolitan area, so this should be taken into account during bill review." Because of this, the impact on balanced development is expected to be a significant topic in the subcommittee.

However, even if the National Advanced Strategic Industry Act amendment is submitted, the path ahead remains long as the other pillar of the K-Chips Act, the amendment to the Restriction of Special Taxation Act, is still pending. The tax subcommittee of the Planning and Finance Committee, which reviews the bill, has not even been formed yet.

The amendment to the Restriction of Special Taxation Act includes ▲ extending the period and rate of tax credits in advanced fields ▲ tax credits for companies’ operating costs of advanced field contract departments, among others. An official from the Industry Committee said, "As far as I know, there are no members in the Planning and Finance Committee who are actively raising the semiconductor special law as an issue or showing interest," adding, "Even if the Industry Committee passes the bill without review by the Planning and Finance Committee, it could result in legislative deficiencies."

A variable is that the Ministry of Strategy and Finance may oppose the expansion of semiconductor tax credit rates, which is the core of the Restriction of Special Taxation Act amendment. Independent lawmaker Yang Hyang-ja, chair of the People Power Party’s Semiconductor Special Committee, said in a phone interview with this outlet, "Even if the Ministry of Strategy and Finance opposes, it is possible to coordinate sufficiently by creating supporting data on the necessity of the bill and going through a persuasion process," adding, "The priority is for the Restriction of Special Taxation Act to be submitted to the Planning and Finance Committee first."

As related discussions remain sluggish, voices are growing that if the K-Chips Act does not pass within this regular session of the National Assembly, there is concern about policy delays. Lawmaker Yang said, "If this bill had passed two to three years ago, there would have been no need to invest 260 trillion won in another country (Texas, USA)," adding, "If the political sphere responds complacently, semiconductor competitiveness will continue to face problems." Ahn Ki-hyun, executive director of the Korea Semiconductor Industry Association, said, "The bill is directly linked to the competitiveness of the industry, and if its passage is delayed, it will hamper our country’s industrial competitiveness," adding, "Time is important in the industry, and we must not forget that managing that time is the role of politics."

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