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South Korea will sharply increase the budget intended to provide more support and incentives for foreign businesses interested in making investments here, the finance ministry said Wednesday.
The government will set aside 300 billion won (US$268.1 million) for next year, which will be used exclusively to attract foreign investment, according to the ministry. The amount is up 36.1 percent from 220.5 billion for this year.
It will also designate up to 12 more zones where the government provides diverse incentives such as tax benefits and the provision of cheaper land for foreign investors, the ministry said.
The moves are part of the government's efforts to bolster foreign investment by improving the overall business environment and infrastructure.
"As the eurozone crisis spreads and the growth pace in emerging countries is slowing, global foreign investment this year is showing signs of losing steam," the ministry said.
"Such countries as China, Japan and the U.S., which account for a relatively high ratio of investment in Korea, are still expanding their overseas investment," it added.
Against this backdrop, the ministry said it will intensify efforts to attract investment, especially from China, Japan and the U.S., by crafting measures "tailored" to business people in each target country.
Foreign direct investment in South Korea reached $9.07 billion during the January-August period, up 35.4 percent from the same period a year earlier. Of the total, about 60 percent came from the three countries.
The ministry said it will double the number of personnel tasked with efforts to attract foreign investment. It plans to launch a team exclusively in charge of measures related to China and Japan.
The government is also stepping up efforts to help Korean companies that are operating overseas, but considering returning to the domestic market.
To that end, it will set aside 35.5 billion won for next year to help the so-called "U-turn" companies. This is the first such budget assigned for the purpose, the ministry said.
The money will be used to provide financial support and other subsidies for their investment in Korea, according to the ministry.
South Korea's economy is facing tough market conditions at home and abroad as exports are slowing and domestic demand including corporate investment remains in a slump.
The government has been calling for businesses to step up hiring and investment so they can help accelerate overall economic growth.
"The recent credit upgrade by Standard and Poor's on our country is thanks to its positive assessment of our fundamentals, but the overall market sentiment is still not good," Finance Minister Bahk Jae-wan told a meeting where the support measures for foreign investment were discussed.
"In order to improve the market sentiment, the key is to increase economic vitality and active investment by businesses," he noted.