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Korean Government to Amend Law to Encourage Reshoring
U-turn Act
Korean Government to Amend Law to Encourage Reshoring
  • By Jung Suk-yee
  • July 24, 2017, 01:45
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The Korean government is planning to amend the so-called U-turn Act to facilitate reshoring and create more jobs in the nation.
The Korean government is planning to amend the so-called U-turn Act to facilitate reshoring and create more jobs in the nation.

 

It has been found that the South Korean government is planning to amend the so-called U-turn Act to facilitate reshoring and create more jobs in South Korea.

The act was implemented in 2013 for the same purposes. However, its excessive requirements such as a complete liquidation of shares have resulted in a less-than-expected outcome. In and after 2012, only 85 South Korean companies signed MOUs to return to South Korea. Only 43 of them actually have done so up to now.

Two years ago, the government reduced the mandatory ratio from 100% to 50% for small firms. Last year, it applied the rule to non-large companies as well. In addition, it amended the law last year so that corporate and income tax reduction can be applied to those returning to natural conservation zones and growth management zones. Nevertheless, the number of such MOUs fell from 37 to nine between 2013 and last year and then to zero this year.

Under the circumstances, the South Korean government is planning to abolish the requirement related to share liquidation in principle. Furthermore, it is going to amend the law so that small firms can receive assistance in accordance with the law even without shutting down their factories abroad and business activities can be supported even after a change in business item.

At the same time, one-stop administrative support is scheduled to be introduced so reshoring of small firms can be facilitated. At present, it takes about half a year for such companies to obtain approvals from the central and local governments. Some of them had to go out of business due to such time-consuming administrative procedures.