Korea to raise cash support on foreign investments in key sectors

South Korea plans to spend more cash on attracting foreign investments in high-tech and core supply chain industries as foreign direct investment to Asia’s fourth-largest economy in the first half dropped on surging global inflation and interest rates, as well as the war in Ukraine.

The Ministry of Trade, Industry and Energy said on Sunday that the government will provide up to 50% in cash of spending by foreigners on the national strategic technology sectors such as semiconductors, secondary batteries and vaccines.

The government also plans to make further support of up to 10 percentage points on foreign investments that improve the country’s supply chain and carbon neutrality.

The country had been providing as much as 40% of investments in the domestic core technologies excluding the establishment of research and development centers.

MORE STATE FUNDS FOR SUPPORT

For the support, the share of state funds for the cash support will be raised by 20 percentage points, the ministry said.

The central government is set to spend 50% of the support for foreign investments in Seoul and surrounding areas and 80% on the investments in the rest, respectively. The government had been paying 30% of the support for the investments in the metropolitan area and 60% for other areas.

FDI pledges fell 15.6% to $11.1 billion in the January-June period from a year earlier, the ministry data showed last week.

The country, however, decided to exclude overseas companies established by local capitals for the cash support. The government will also set up clear criteria to select beneficiaries by adding quantitative evaluation.

Write to So-Hyeon Kim at alpha@hankyung.com
Jongwoo Cheon edited this article.