Mu-hyup "Tax Support Plan for Semiconductor Facilities and R&D Investment Must Pass National Assembly"

[Asia Economy Reporter Park Sun-mi] The Korea International Trade Association (KITA) has urged the swift passage of tax support measures for semiconductor facility and research and development (R&D) investments in the National Assembly to address the issue of sluggish exports in the Korean economy.

On the 21st, KITA announced that it held a “Meeting with the Trade Industry of Busan, Ulsan, and Gyeongnam for Export Expansion” at the Busan Trade Center the previous day, chaired by Vice Chairman Jeong Manki, to identify difficulties and regulatory issues faced by local export companies on the ground. At the meeting, Vice Chairman Jeong stated, “While export sluggishness is a global phenomenon, the problem is that South Korea is relatively more sluggish.” He added, “This is partly due to our export industry being mainly composed of intermediate goods, which are sensitive to economic fluctuations, but also due to the weakening of the export industry base caused by the decline in global export market share from 3.2% in 2017 to the current 2.8%, influenced by expanded corporate regulations and other factors.”

As Korean companies have relocated to countries such as Vietnam, South Korea was overtaken by Vietnam in the U.S. import market share for the first time in 2022. Vice Chairman Jeong explained, “Considering that a 0.1 percentage point drop in global export market share results in a loss of 140,000 quality export jobs, the approximately 0.4 percentage point decrease in export market share so far has led to the disappearance of about 500,000 quality jobs.”

While major competitors such as the United States are accelerating domestic industry development by reducing corporate taxes and expanding subsidies?offering a 25% tax credit on semiconductor facility investments and a 20% credit on R&D?South Korea’s revised tax credit bill for semiconductor facilities and R&D investments has yet to pass the National Assembly, raising concerns. He said, “Even if it is not better than foreign countries, at least the National Assembly should promptly pass the relevant laws to create equal industrial conditions and secure quality jobs.”

Meanwhile, at the meeting, participating companies cited labor shortages as their greatest difficulty. Regarding this, Vice Chairman Jeong forecasted, “Until now, we have managed by utilizing foreign workers, but this year, despite the use of foreign labor, the decline in the domestic working-age population means that demographic changes will negatively impact economic growth for the first time.” He added, “While making short-term efforts to secure labor through expanded use of foreign workers, activation of employment for the elderly and women, and improvements to the unemployment benefits system to encourage work motivation, the government, social and economic organizations, and civil society must actively engage to solve the root cause of the problem?the low birthrate issue.”

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