Local Governments Compete to Support Semiconductor Specialized Complex Development... Industry Shows 'Interest'

National Advanced Strategic Industry Committee to Discuss Detailed Tasks for Specialized Complex Development
Local Governments Compete Actively to Establish Semiconductor Specialized Complexes
Considering Local Governments' Own Incentives in Addition to Existing Benefits
Active Support Atmosphere Benefits... Passage of K-Chips Act Also Needed

[Image source=Pixabay]

[Asia Economy Reporter Kim Pyeonghwa] With the enforcement of the "Special Measures Act on Strengthening and Protecting the Competitiveness of National Advanced Strategic Industries (National Advanced Strategic Industries Act)," the designation process for specialized complexes is accelerating, leading to active competition among local governments to attract them. Various local governments are taking proactive steps by preparing separate incentives to secure competitive advantages, and the semiconductor industry is showing interest in the increasing benefits.

According to the semiconductor industry, government, and local governments on the 3rd, the National Advanced Strategic Industry Committee, chaired by Prime Minister Han Duck-soo, will be held on the 4th of this month. The National Advanced Strategic Industry Committee is the control tower for national advanced strategic industry policies, composed of about 20 members including the Prime Minister, the Minister of Trade, Industry and Energy, and private members recommended by the Minister of Trade, Industry and Energy.

At the upcoming National Advanced Strategic Industry Committee meeting, detailed tasks for the creation of semiconductor specialized complexes will be discussed in accordance with the National Advanced Strategic Industries Act, which was enforced in August this year. Based on the discussions, the Ministry of Trade, Industry and Energy plans to issue a public notice to receive applications from local governments wishing to establish specialized complexes and proceed with the selection process.

A Ministry of Trade, Industry and Energy official stated, "If the designation procedures and requirements are approved at this meeting, we intend to issue a public notice based on that content," adding, "Afterwards, we will proceed with the application process by receiving local government plans within a set period." Since the procedures and periods are set step-by-step, the final selection results are expected to be announced after January next year, contrary to previous expectations.

Local governments wishing to establish semiconductor specialized complexes have already begun related work. If a semiconductor specialized complex is attracted, support will be provided for rapid processing of related permits, infrastructure construction costs such as roads, water and electricity energy supply facilities, and waste and wastewater treatment facilities. Support for workforce training will also be provided. For local governments, this is an opportunity to attract regional investment through the participation of semiconductor-related companies in the specialized complexes, so they have no choice but to actively pursue it.

In fact, Incheon City formed a Semiconductor Specialized Complex Promotion Committee this month, including city officials and experts from related organizations. Jeollanam-do, together with Gwangju City, has been steadily carrying out related work since July to jointly foster the semiconductor industry and has established a Semiconductor Industry Promotion Committee. Other local governments such as Chungcheongbuk-do and Gumi City have also expressed their intention to participate in the competition and are conducting related projects.

Local governments are also considering separate benefits to gain a competitive edge. For example, Incheon City, which includes a Free Economic Zone, expects that tax reductions under related laws could be a differentiating advantage. Gwangju and Jeonnam are considering incentive plans such as support for water usage and provision of land. Chungbuk also plans to formulate internal strategies according to specific requirements once they are announced in the public notice.

The semiconductor industry holds the view that the more government and local government benefits increase, the more advantageous it is for their business. Recently, the United States enacted the Chips and Science Act (CSA), strengthening tax credit benefits, and Taiwan is adding various benefits to support semiconductor companies, while domestic support has been relatively insufficient. The industry explains that the more various supports are added, the more it helps strengthen competitiveness.

There is also an opinion that to go beyond such support, the passage of the K-Chips Act (amendments to the National Advanced Strategic Industries Act and the Restriction of Special Taxation Act), currently under discussion in the National Assembly, is necessary. The K-Chips Act is currently pending in the National Assembly, and its passage is uncertain.

Yoo Hwan-ik, Head of the Industry Division at the Federation of Korean Industries, said, "Major countries actively attract investment and provide support at the national level to dominate the semiconductor industry," emphasizing, "For South Korea to maintain its semiconductor industry superiority, it must pursue aggressive policies such as raising the facility investment tax credit rate to 25%, like the United States."

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