According to Yonhap News,

(SEJONG = Yonhap News) The Korean government plans to increase subsidies for companies that make capital investments in regional areas.

The Ministry of Trade, Industry & Energy (MOTIE) held a working-level meeting on regional economic issues at the Government Complex in Gwacheon on January 28 and announced a revised regional investment promotion subsidy program. The meeting was attended by officials of 17 cities and provinces.

Under the revised program, the government will grant companies subsidies up to 12 percent of the capital investment in regional areas, up by two percent from last year. The rate will then be adjusted to 13 percent between 2017 and 2018.

However, rent subsidies for factory sites will be gradually reduced from 35 percent to 30 percent between 2014 and 2016, and 25 percent between 2017 and 2018.

The decision appeared to be a reaction to the criticism that, unlike capital investment that has a great ripple effect on local job creation and economic development, rent subsidies may result in speculative investment in real estate.

Companies in Kaesong Industrial Park are also eligible to apply for government subsidies if they invest in noncapital regions. The government expects that the subsidy will enable the companies to establish supplementary facilities to continue their production and minimize risks such as the temporary suspension of Kaesong Industrial Park.

By municipal government, the number of locally oriented industries eligible for the subsidies will be increased from four to six.

The government said it has provided a total of KRW 590 billion to 420 companies for five years since 2009, and has attracted a total of KRW 9.1547 trillion in investments, with 23,902 new employment opportunities.