South Korea's government said Tuesday it plans to use tax breaks and other
incentives to fuel private investment vital for sustainable growth and job
creation.
In a meeting of economic policymakers, the Ministry of
Strategy and Finance said it will revamp tax law so more benefits can be given
to both local and overseas companies that seek business opportunities in the
country.
The measures come as economic policymakers oppose artificial
economic stimulus measures that could trigger more problems down the road, and
after business investment growth fell in the past few years to hit minus 3.3
percent in the fourth quarter of 2011. This is in sharp contrast to the 25.7
percent growth posted for the entire 2010 year.
Under the plan,
support will be given to companies engaged in such areas as logistics,
pharmaceuticals, medical equipment, information contents, the environmental
industry and breweries.
Tax breaks will be given for the development
of vaccines and clinical testing of new drugs, with support for medical
equipment designed to raise the self-sufficiency and export competitiveness of
domestically made products. In logistics, the emphasis will be placed on getting
big companies to outsource their shipments to promote the growth of smaller
companies in the field.
For information contents and breweries,
regulators will streamline red tape, and cash support will be offered to
environmental preservation companies.
In addition, the ministry in
charge of the country's macroeconomic policies said it is taking steps to help
attract foreign theme parks to the country by designating Hwaseong and Chuncheon
as special foreign capital investment zones.
Such designations exempt
foreign investors from paying state taxes for five years, with additional
regional tax cuts to be offered for 15 years.
Hwaseong, about 33
kilometers southwest of Seoul, hopes to attract Universal Studios while
Chuncheon, 85 kilometers east of the capital, is eying the creation of a Lego
Land park.
The ministry said to get more private companies to invest
in the public sector, it will allocate 600 billion won for
build-transfer-operate and build-transfer-lease projects. Seoul has set aside
68.8 trillion won this year on public building programs in energy and railway
projects.
Companies engaged in such projects will be able to access
low interest loans from banks.
The government, moreover, said it will
introduce a "crowd funding" system to make it easier for very small venture
start-up business to generate money online after meeting state
requirements.
"This system, in place in some advanced industrialized
economies, can assist small businesses that have growth potential get funding,
without going to banks," an official said. He said related laws should be set up
in the first half of 2013.
The government also said state-run
financial institutions will expand their hiring of new employees this year as
part of an ongoing effort to create good jobs.
The new posts will be
created by such companies as Export-Import Bank of Korea, Korea Finance Corp.
and Korea Technology Credit Guarantee Fund.
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