Aggressive Investment
In order to create a second Middle East boom, the Korean government will make an investment of 5 trillion won (US$4.46 billion) into higher-risk investment development projects.
It has decided to provide full support for Middle Eastern businesses, from financing and taxation to deregulations. It will also designate a service-type foreign investment region where Middle Eastern companies can get tax benefits and other perks. The goal is to encourage foreign capital investment from the Middle East in the domestic service industry.
The plan was announced at a trade promotion meeting hosted by President Park Geun-hye on March 19.
The government decided to expand financial support and investment guarantees to companies that participate in large plant projects, and city and water resource development projects in the Middle East.
To do so, it will raise the amount of loans given by the Korea Trade Insurance Corporation and the Export-Import Bank of Korea in the overseas construction and plant sectors this year by 2.9 trillion won (US$2.59 billion) and 400 billion won (US$357.14 million), respectively.
It will also introduce co-securities worth 300 billion won (US$267.86 million) for K-sure, Korea Eximbank, and the indirect loan system or overseas on-lending worth 1 trillion won (US$892.86 million) for the first time, increasing support to small and medium-sized companies.
The government is planning to manage foreign investment funds worth US$1.6 billion (1.79 trillion won), which have already been raised, and raise additional characterized funds worth 300 billion won (US$267.86 million), including global ocean funds.
In the measure, the government estimated an additional 5 trillion won (US$4.46 billion) will be invested for policy funds. It is a support measure considering the fact that the financing ability of bidding companies has emerged as a major competitiveness for contracts, since the financial condition of oil-producing countries in the Middle East has been aggravated due to a fall in oil prices. The government expects that the scale of contracts this year will reach US$70 billion (78.4 trillion won), and go up to US$80 billion (89.6 trillion won) in 2017.
Following the Middle East, the Korean government decided to expand support to investment development projects in Latin America and Africa.
In the health and medical sector, the government decided to promote service businesses to advance into the global market, including the creation of funds worth 150 billion won (US$133.93 million).
In the services sector, it will ease requirements for the designation of foreign investment zones for the service industry in Korea in order to attract foreign investment funds. In this case, the foreign investment zone for the service industry is expected to be created in the center of the city.
Also, the government is planning to strengthen policy fund support for foreign investment projects, including health, medical care, tourism, and content, and provide tax support in the newly-selected service industry, which needs the attraction of foreign capital.
Regarding the development of a complex resort in Midan City in Yeongjongdo invested in by the foreign casino capital LOCZ, the government decided to confirm the plan to relocate the military base and the time within this month in order to solve problems about the limits of altitude at the neighboring military base.
Through the inducements, the government is hoping for foreign investment expansion from US$20 billion (22.4 trillion won) this year to US$30 billion (33.6 trillion won) in 2017.