Korea strengthens incentives to lure multinational firms

Attracting foreign direct investment emerges as a policy priority

President Park Geun-hye meets CEOs of foreign-invested firms at Cheong Wa Dae on Thursday. (Yonhap News)

Korea will offer strong incentives to potential foreign investors in a bid to attract more foreign direct investment.

The move came as part of government efforts to dig up new sources of revenue amid stagnant economic conditions.

“In an effort to create more value from FDI, the priority for our policies will be to offer stronger incentives for multinational companies seeking to relocate their head offices or research and development centers to Korea,’’ Trade, Industry and Energy Minister Yoon Sang-jick said Thursday.

“For this, the ministry will issue a certification to such foreign firms that will make them eligible for an array of incentives, including a permanent income tax reduction for employees.’’

The comments came during a luncheon meeting between President Park Geun-hye and dozens of leaders from the foreign business community at Cheong Wa Dae.

The closed meeting was designed for President Park to encourage the foreign business community to increase investments to Korea by presenting them with recent improvements in the foreign business environment.

The four heads of the U.S., EU, German and Japanese business chambers in Korea and 21 CEOs of multinational firms here, including GE Korea, General Motors Korea and Siemens Korea, joined the luncheon, the ministry said.

In her opening remarks, President Park reportedly assured them of the government’s strong will to improve the foreign business environment and attract more foreign direct investments. 

 

In 2013, a U.N. survey ranked Korea as 31st of 207 nations in FDI inflow, which is far below its GDP ranking at 15th.

Another main point of the improved FDI attraction policy presented by Minister Yoon was the revised foreign investment promotion act, which allows the establishment of a joint venture firm between a third-tier company of a local conglomerate and a foreign partner firm.

“We expect that the revised act could lure additional investments from foreign companies, which have considered a joint partnership with chaebol with a big buying power at home and abroad,” said an official from the investment policy team under the Ministry of Trade, Industry and Energy.

To improve the living environment for foreign residents, the nation’s satellite TV stations will expand English subtitle services, while the Korea Immigration Service will offer foreign business people better services.

Following the minister’s presentation was a session for the invited businesspeople to discuss their additional investment plans and challenges and difficulties that they have faced while doing business here, Cheong Wa Dae said.

Thilo Halter, president of the European Chamber of Commerce in Korea, advocated for a predictable business and regulatory environment during the meeting, the EUCCK said in a press release.

The foreign business community has insisted that the government should launch a bold deregulation drive to lure more foreign investments and has complained of the continued increase in labor costs here.

By Seo Jee-yeon (jyseo@heraldcorp.com)