Distribution Industry Also Recognized for 'U-Turn'... Non-Capital Region Subsidies for Advanced Industries Increased from 30 Billion to 40 Billion Won

Ministry of Industry Announces 'U-Turn Support Strategy 2.0'
Considering and Promoting Recognition of Domestic Investment as U-Turn Investment through Capital Reshoring

The government plans to lower the selection threshold for U-turn companies by adding distribution businesses (wholesale and retail) to the recognized U-turn industries and expand the subsidy support limits for U-turn companies in advanced industrial sectors.

On the 7th, the Ministry of Trade, Industry and Energy held a 'U-turn Company Support Policy Meeting' chaired by Minister Andeokgeun and announced the 'U-turn Support Strategy 2.0' containing these details.

The ministry noted that due to recent supply chain restructuring, US-China strategic competition, and domestic protectionism, the need to revitalize U-turns in advanced industries is increasing. After gathering opinions from industry, experts, and related ministries, it established this support strategy.

An official from the ministry explained, "In 2022 alone, 22 overseas-expanding companies returned to Korea, and since 2020, more than 20 companies have returned annually. The investment plans of U-turn companies surpassed 1 trillion won for the first time in 2022 and have recorded over 1 trillion won for two consecutive years."

First, the scope of recognized U-turn companies will be expanded, and selection and support requirements will be eased. Distribution businesses will be added to the recognized U-turn industries, which were previously limited to manufacturing, knowledge services, information and communication, and quarantine/immunity-related sectors. Additionally, the standard for product identity between overseas and domestic production will be relaxed from the subcategory level (3-digit) to the middle category level (2-digit) in the standard industrial classification. The ministry also plans to review and promote recognizing capital reshoring?where domestic companies bring overseas earnings back to Korea and invest domestically?as U-turn investment. According to the ministry, the scale of capital reshoring by domestic companies last year reached a total of 43.45 billion USD.

Furthermore, strategic industries such as national strategic technologies, advanced strategic technologies, and future automobile parts and products will be added to the exemption list for overseas business restructuring (liquidation, transfer, reduction). Currently, only core technologies in advanced technology and materials, parts, and equipment are exempt from restructuring requirements. The regulation restricting overseas investment for a certain period when companies exempt from overseas business restructuring receive subsidies will be abolished, and the operation requirement for overseas business sites of U-turn companies will be relaxed from over 2 years to over 1 year.

Incentive support for U-turn companies in advanced industrial sectors will also be significantly strengthened. The government has expanded the U-turn investment subsidy budget from 57 billion won last year to 100 billion won this year. For U-turn investments in national strategic technologies and advanced strategic technologies, the subsidy limit will be increased from 15 billion won to 20 billion won in the metropolitan area and from 30 billion won to 40 billion won in non-metropolitan areas, focusing support on U-turn companies in advanced industrial sectors.

For research and development (R&D) investments such as research facilities and equipment accompanying production facility investments, an additional support of up to 5 billion won beyond the limit will be provided. Support for business restructuring of U-turn companies and co-prosperity and cooperative U-turns contributing to supply chain stability will also be increased.

Additionally, the issuance support for E-7 (specific activity) visas for U-turn companies will be expanded from 1 type to 8 additional types. Preferential treatment will be given when moving into advanced strategic industry and materials, parts, and equipment (SoBuJang) specialized complexes, and preferential treatment in export support projects will be provided to strengthen domestic settlement support such as manpower and location for U-turn companies. Cooperation among related agencies will also be strengthened to promote U-turn policies and discover U-turn demand.

Minister An said, "In the current difficult conditions of high inflation, high interest rates, and high exchange rates, revitalizing investment including U-turn investment is very important not only for promoting exports and employment but also for economic security such as supply chain stability. We will promptly revise related laws and regulations and implement the support strategy without delay."