Busan-Jinhae Free Economic Zone Authority Actively Attracts Reshoring Companies Amid Tariff War

Busan-Jinhae Free Economic Zone Authority (Commissioner Park Sungho) is actively working to attract domestic reshoring companies, as the global supply chain realignment triggered by President Trump's tariff policies is gaining momentum.

Recently, countries around the world have been strengthening protectionist policies to safeguard their domestic industries. The United States and China have engaged in mutual tariff hikes, escalating into a trade war. This trend is seen not as a short-term phenomenon but as a shift in the global economic paradigm over the medium to long term, prompting many global companies to undertake structural adjustments to disperse supply chain risks.

Amid such global uncertainty, the Authority is focusing on enhancing investment appeal for businesses by easing various regulations and improving institutional frameworks. Recent measures include raising the building height limit in the Ungdong District from 40 meters to 60 meters and extending the rent reduction period for reinvesting companies in the port hinterland complex, among other practical support policies for resident companies.

In particular, the Authority plans to launch an intensive promotional campaign in May targeting countries with high demand for reshoring, such as China, Vietnam, and Indonesia, utilizing local Korean-language media outlets. Through these efforts, the Authority aims to proactively respond to the rapidly changing international trade environment and actively promote support systems for reshoring companies to increase the likelihood of attracting them.

Key incentives offered to reshoring companies include investment and relocation subsidies, corporate and customs tax reductions, employment creation incentives, restructuring consulting, guarantees and insurance support, financial assistance such as facility investment funds, support for smart factory establishment and research and development, and intellectual property protection. A wide range of customized support is provided to help companies successfully settle in Korea.

Certain requirements must be met to qualify for these incentives. As a basic requirement, companies must have operated an overseas business for at least two years and must exercise effective control over both their overseas and domestic operations. Eligible overseas business sectors are limited to manufacturing, information and communications, knowledge service industries under the Industrial Development Act, and industries related to quarantine and immunity. In addition, the actual controlling party of both the overseas and domestic businesses must be the same, and must hold at least a 30% ownership stake.

There are also implementation requirements. Reshoring companies must either liquidate or transfer their overseas operations, or carry out restructuring by reducing production volume by at least 25%. However, liquidation or transfer is not mandatory; a reduction in sales alone is sufficient. In Korea, companies must establish or expand a business in the same industry sector.

Since the Busan-Jinhae Free Economic Zone spans both Busan and South Gyeongsang Province, separate consulting centers for reshoring incentives are operated by region.

Commissioner Park Sungho stated, "The Busan-Jinhae Free Economic Zone boasts outstanding locational advantages, with Busan Port serving as the world's second-largest transshipment port and a global logistics hub. In these uncertain external economic conditions, it is time for a counterintuitive approach that turns crisis into opportunity. We will continue to do our utmost to resolve regulations and strengthen support systems so that companies can invest with confidence."

Transshipment and import-export cargo containers waiting for shipment are piled up at Busan New Port within the Busan-Jinhae Free Economic Zone. Provided by Busan-Jinhae Free Economic Zone Authority

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