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Gov't to promote private investments in newly emerging industries

According to Yonhap News,

(SEJONG=Yonhap News) The government on Thursday announced a fresh set of measures, deregulations and tax rewards to stimulate private investments in newly emerging industries, such as pet care services and halal food and culture.

In a pan-government trade and investment promotion meeting chaired by President Park Geun-hye, relevant ministries unveiled new policy efforts to encourage the private sector to invest approximately 4 trillion won (US$3.4 billion) in the promising industries.

"The government has been making efforts to buoy the corporate sentiment as businesses are facing strong headwinds inside and outside of the country and struggle with faltering exports," Deputy Finance Minister Lee Chan-woo said in a briefing. "The latest policy measures will help them do business in a more favorable environment by fostering new emerging industries."

The nation's exports have decreased for 18 straight months due to weakening global demand and heightened competition in key industries, such as smartphones and cars. As a result, the government cut its 2016 growth forecast to 2.8 percent from an earlier 3.1 percent, citing weak domestic consumption and rising global uncertainties triggered by the British vote to leave the European Union, or Brexit.

The central bank lent support to it, having slashed the base rate to a fresh low of 1.25 percent earlier last month.

It also stressed stronger fiscal reinforcement, churning out a number of fiscal policies, including a recent one to draw up a 10 trillion won supplementary budget.

As a first step, the Ministry of Strategy and Finance said it will speed up legal and administrative procedures on a 1.7 trillion won-project to build culture and shopping complexes on the northern outskirts of Seoul.

The project was arranged by one of the country's leading K-pop labels, YG Entertainment Inc., in 2014 but has been in a deadlock due to stuttering government approval procedures including mandatory environmental and transportation studies.

With much emphasis on investment and tourism, the government will also fast-track the paperwork and administrative process for projects to build a robot theme park in southeast Korea and to develop a trekking course in the mountainous region of Gangwon Province.

The ministry will also lower legal barriers for the cosmetics sector to build an industrial complex in the central region, where aesthetic companies can grow herbs for cosmetics, carry out research and development (R&D) and produce goods in house.

To bolster the fast-growing halal industry, referring to food and other daily objects permissible to use in accordance with Islamic law, the South Korean government will acknowledge overseas-issued halal food and cosmetics certificates and make them available in the country.

It will seek to join the international movement to establish the global halal standards along with the United Arab Emirates, Saudi Arabia, the United States and Australia.

At the same time, the government will remove obstacles to fueling the development of the local pet industry as a growing number of one-person households keep pets.

The pet-related market including pet food and grooming services is expected to soar to 6.8 trillion won in 2020 from 1.8 trillion won in 2015.

The government will improve related laws and regulations in such a way to meet the needs of pet lovers, including tightening hygiene guidelines on pet breeding farms to provide healthy animals to the market.

An online pet auction market will be launched before the end of this year, with only registered operators to be allowed to engage in the business.

In line with the deregulation drive, other pet-related markets like insurance, funeral services, veterinary clinics and nursing services will be also opened for business.

Also, the finance ministry will give financial and tax incentives to private property funds, or real estate investment trusts (REITs), that go public, as part of its plan to boost the sector and the entire real estate market.

Meanwhile, the Ministry of Trade, Industry and Energy also came up with programs to boost exports by encouraging the business sector to upgrade their goods and make investments into the potential future industries.

The electric vehicle industry is at the top of the supportive program, with the country expected to export an annual 200,000 units of the eco-friendly car by 2020 with a world market share of 10 percent.

In order to achieve the goal, the government will help battery companies conduct R&D projects and set up nationwide electric car charging stations, while electric car buyers will get more financial incentives such as a 50 percent discount at public parking lots.

The ministry said the plan includes ways to reorganize the local exporting industry in order to transform it into a consumer goods-oriented one.

South Korea is highly dependent on exports of intermediate, or semi-finished, goods such as auto parts and machinery that are reprocessed and re-exported by the importing countries.

"It is aimed at improving the country's industrial structure and expanding shipments of higher valued consumer goods," the trade ministry said. "The government will help such companies develop premium products and tap into overseas markets by removing non-tariff barriers."

The trade ministry said companies that offer goods to duty-free shops will be categorized as exporting firms so that they will receive equal taxation and other administrative benefits.

Copyrights Yonhap News. All Rights Reserved.

Source Text

Source: Yonhap News (Jul. 7, 2016)

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