Chungnam Provides Up to 55.2 Billion KRW Support for Companies Relocating Factories from Overseas to Domestic Locations

[Asia Economy (Naepo) Reporter Jeong Il-woong] Chungnam Province will provide up to 55.2 billion KRW per company to businesses relocating factories from overseas back to Korea.

The province announced on the 15th that it has prepared and will actively promote the "Domestic Return Enterprise Attraction Promotion Plan" with this content.

The promotion plan focuses on an aggressive strategy involving large-scale subsidies to induce overseas enterprises to return to Korea.

The target is regional companies operating factories overseas among advanced technology (IT) companies such as electrical equipment, communication equipment, and automobile parts. The province plans to individually contact these companies to gauge their willingness to return and attract them to the region.

In particular, by providing hundreds of billions of KRW in national and local subsidies and relocation incentives according to the scale of investment, the province intends to realize the attraction of domestic return enterprises to the region.

For example, if a company invests 150 billion KRW in Chungnam, purchases land worth 23 billion KRW, builds a factory, and creates about 500 jobs, the province will simultaneously support 14% of the investment amount (21 billion KRW, national funds) as equipment subsidies, 40% of the land purchase price (9.2 billion KRW, local funds) as site subsidies, 5% (7.5 billion KRW, local funds) as employment subsidies, 5% (7.5 billion KRW, local funds) as headquarters relocation incentives, and 10 billion KRW (city/county funds) as large-scale special support. In this case, the total support amount the company can receive is 55.2 billion KRW.

Companies can be eligible for support if they meet conditions such as ▲operating a business overseas for more than 2 years ▲having substantial control (owning more than 30% of shares) of overseas and domestic business sites ▲liquidating, transferring, or reducing production by more than 25% at overseas sites ▲operating the same industry domestically upon return ▲hiring at least 20 new employees and scoring 60 points or more in feasibility evaluation.

The province is also pushing to amend the "Chungnam Shared Property Management Ordinance" to support the return of overseas enterprises. The amended ordinance is expected to include provisions for preferential contracts and long-term leases (50 years) of factory sites, rent calculation and reduction, and priority occupancy of leased land in Seokmun National Industrial Complex, as well as reductions in lease or usage fees for domestic return enterprises.

Above all, the province plans to propose to the government to change the timing of corporate and income tax reduction benefits from the time of return to the time when the company generates profits after returning, and to revise the system to allow loans through guarantees by the national or local governments.

A provincial official said, "With the prolonged trade dispute between the US and China, ongoing export restrictions by Japan, and the overlapping COVID-19 pandemic, the overall domestic and international economy is overshadowed these days," adding, "The province will actively attract domestic return enterprises to overcome this economic crisis and strive to create quality jobs through these companies."