According to Yonhap News,

(SEOUL=Yonhap News) It would become easier for high-tech companies (semiconductor, AI, etc.) and reshoring companies to be tenants in Free Trade Zones (FTZs).

According to the Ministry of Trade, Industry and Energy (MOTIE), partial amendment bill to the 'Enforcement Decree of the Act on Designation and Management of Free Trade Zones' passed the State Council on July 6, and will be implemented from July 13.

The government announced 'Free Trade Zone Innovation Strategy' in November last year to turn traditional manufacturing/logistics industry-centered free trade zones into the hub of high-tech exports and investment.

As a follow-up measure to the announcement, the government has amended the Enforcement Decree to ease occupancy requirements for high-tech and reshoring companies.

Currently, those who want to move in to FTZs must have 50 percent or more share of exports out of total sales in case of large business (middle market enterprise: 40 percent, SMEs: 30 percent). However, high-tech and reshoring companies can move in when they meet the requirements of 30 percent or more export ratio, the same as foreign invested companies (SMEs 20 percent).

With easing occupancy requirements, the government plans to set up "FTZs investment attraction support group' in public-private cooperation, together with local governments, KOTRA and others, to identify candidates for tenant companies and actively carry out investment attraction activities.

FTZs were introduced as export outposts in the 1970s, ensuring free manufacturing/logistics/distribution/trade activities, and have provided diverse benefits including tariff suspension, affordable rental fees, and reduction of local tax and rental fees for foreign invested companies.

There are 13 designated FTZs, including Masan (1st designated), Gunsan, Daebul, Busan Port, and Gwangyang Port.

Director General Ahn Seong-il of Free Economic Zone Planning Office said "Since relaxation of occupancy requirements for startups in 2019, 15 startups have become tenants in free trade zones up to date," adding "we will actively attract high-tech/reshoring companies and endeavor to turn them into a stimulus to revitalizing local economy and increasing exports."

fusionjc@yna.co.kr


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Source: Yonhap News (July 6, 2021)