South Korea took a series of steps to offer more incentives and greater access to foreign investors Tuesday in an attempt to help revamp the country's economy under the long-lasting effects of eurozone woes and resulting global slowdown.
The Ministry of Knowledge Economy said the moves will help attract over 1 trillion won (US$895 million) in foreign investment in the second half alone.
"Foreign investment could provide a driving force that will revitalize the country's economy, especially in times of worsening external conditions," Vice Minister Cho Seok was quoted as telling the ministry's foreign investment committee.
The committee newly designated the site of eight foreign-invested firms and joint ventures as foreign investment zones, a move that will totally exempt the companies from the corporate tax for the next five years with a 50-percent reduction of the corporate tax for the following two years.
It also decided to increase the government's financial support for foreign-invested research and development centers to 40 percent of foreign investment in such institutes from the current 30 percent, the ministry said.
The government claims the country's economy is coping with the global economic downturn better than any other country, but it is beginning to show signs of a slowdown while Finance Minister Bahk Jae-wan says there is no sign of an end to the European financial crisis.
The country's central bank earlier said the country's domestic gross product grew 2.3 percent from a year earlier in the first six months of the year, down from an earlier estimate of 2.4 percent and also far short of the government's annual growth target of 3 percent.
Its exports also dipped for two consecutive months in August, shrinking 6.2 percent from the same period last year.
Desperate to
keep the country's economy from going into a long-term recession, the government
also lowered its bar for foreign casinos.
Foreign-invested casinos are
already allowed in the country's free economic zones (FEZ), but investors must
meet all four criteria that include the investors' existing business or
investment must have turned up profit in at least two out of the past three
years.
To attract more investors, as well as tourists, to free
economic zones, the Cabinet on Tuesday approved a revision to FEZ regulations
that will ask only three, instead of four, requirements from new investors in
casinos.
In addition, investors will be given approval for their new
casinos in advance, whereas permits for new casinos are currently given only
after the facilities are fully established, meaning investors face a risk of
spending large sums of money to set up a casino and not being able to open up
for business.