[2024 Economic Policy] Greenbelt Regulation Relaxation and 150 Trillion Support for Semiconductors and Advanced Industries

2024 Economic Policy Direction - A Vibrant Livelihood Economy

The government will significantly improve major location regulations, including easing restrictions on Greenbelt areas. It will also reorganize location regulations for farmland and mountainous areas to create an environment where active investment can take place within regions. Over the next three years, more than 150 trillion won in policy financing will be supplied to key advanced industries such as semiconductors. To prevent the so-called ‘Peter Pan syndrome,’ where mid-sized companies that find it difficult to receive benefits for small and medium enterprises (SMEs) wish to revert to SME status, existing tax benefits will be extended for up to five years.

Easing Location Regulations on Greenbelt, Farmland, and Mountainous Areas

On the 4th, the government jointly announced the '2024 Economic Policy Direction' containing these measures. The government decided to ease the three major location regulations on Greenbelt areas, farmland, and mountainous areas. First, it will relax the conditions for lifting Greenbelt restrictions in non-metropolitan areas. The Ministry of Economy and Finance plans to ease the lifting conditions when attracting advanced industries essential for regional economic development, thereby promoting investment within the region.

Regulations on farmland and mountainous area use will also be eased. A rural opportunity development special zone (autonomous regulation innovation zone) will be introduced in high-risk areas facing regional extinction, and farmland use requirements will be relaxed. For example, farmland use will be permitted under certain conditions for some smart farm facilities. Although the distribution of smart agricultural facilities optimized for crop growth environments is increasing, the current situation requires farmland conversion permits to install such facilities, which the government aims to improve. Additionally, the use of mountainous areas will be expanded when necessary for corporate activities. However, the government explained that improvements to location regulations will be pursued only within limits that do not affect landslides or similar impacts.

150 Trillion Won Supplied Over 3 Years to High5+ Industries

More than 150 trillion won in policy financing will be supplied over the next three years to key advanced industries (High5+), including semiconductors. This aims to strengthen government support to increase investment in key advanced industries such as semiconductors (including displays), secondary batteries, bio, mobility, and hydrogen. The government plans to secure funding capacity through government equity investments in policy financial institutions for these industries. Furthermore, to promote investment in advanced industry sectors, the application of national strategic technologies and new growth and original technologies eligible for high tax credit benefits during research and development (R&D) and facility investment will be expanded.

‘Customized Support’ for Advanced Industry Clusters... Differential Limits and Support Frequency Restrictions Removed

Customized support to accelerate the establishment of advanced industry clusters will also be promoted. The government will classify the progress of clusters being developed as advanced innovation hubs and strengthen close support. The status of cluster development will be identified at each stage?before industrial complex planning, during planning and approval, land acquisition and groundbreaking, and company settlement?to promptly implement necessary measures tailored to each phase. To ensure that infrastructure for advanced industry specialized complexes is built on time, support limits will be differentiated considering investment scale, and restrictions on the number of supports within the limit will be abolished. Additionally, measures will be prepared to supply large-scale power promptly to national advanced strategic industry specialized complexes.

Tax support to establish stable growth for SMEs has also been prepared. To resolve the so-called ‘Peter Pan syndrome’ of SMEs, the period during which mid-sized companies that have grown from SMEs can continue to receive existing tax benefits will be extended from three to five years. The government plans to sequentially revise the Enforcement Decree of the Restriction of Special Taxation Act following amendments to the Framework Act on Small and Medium Enterprises. Moreover, after conducting research and studies, the system will be improved to gradually reduce benefits once SMEs grow into mid-sized companies.