Korea Loses Semiconductor Plant Bid

Samsung Electronics’ semiconductor plant, which will be built in Singapore for the first time ever, was originally to be constructed in Korea. The plan was changed, however, as the joint partner for the project, the German-based Siltronic, opposed it, citing the poor investment environment in Korea.

The active attitude of the Singapore public officers to attract the joint venture to the country was impressive.

German companies say, “Korea is not investor-friendly”-

An official of Samsung Electronics said Sunday, “We originally planned to build the semiconductor plant, the production base of a joint venture with the German semiconductor material firm Siltronic, in Korea, but it was cancelled due to strong opposition from Siltronic.”

According to Dong-A Ilbo legwork, the reason Siltronic opposed to the plan was because of the unfriendly investment environment in Korea, which makes foreign companies leery.

Siltronic showed dissatisfaction with the weak infrastructure in Korea, which makes it difficult for foreign companies to do business, and, in particular, was worried about the education of the residential employees’ children in the country, citing the lack of international schools.

Siltronic also pointed out the anti-business sentiment in Korea as well as the unfavorable policy for foreign companies as additional stumbling blocks for foreign investments in Korea.

Due to the opposition of the joint venture and the Singapore government’s pledge for an active support, Samsung had no choice but to decide on the plant site in Singapore, although it made a great effort to construct the plant in Korea.

Before the decision, Samsung Electronics and Siltronic recently agreed to invest $4 billion ($2 billion each) to establish the joint corporation in Singapore for production of 12-inch wafers.

To attract the corporation, Singapore made drastic pledges, such as an exemption of corporate taxes for 15 years from the point of the plant’s operation, and $27 million in government subsidies for R&D and employee education.

In addition to this, it agreed to loan the $4 billion at a long-term low yearly interest rate of two percent for 10 years and to lease the site for the plant at $30 per pyeong for the next 60 years.

Singapore public servants moved the hearts of Samsung officials-

For the project, the director of the Singapore Economic Development Administration met with the people in charge at Samsung and Siltronic in person.

In regards to this, an official at Samsung said, “We were especially moved, because in Korea, a junior official would have engaged in such projects. We were really surprised by the commitment of the Singapore government to promote foreign investments. Furthermore, the administrative procedure in Singapore only took a few hours. The government officials there have the same mindset as business people.”

Recently, with such effort, Singapore successfully attracted the plant of Soitec, a leading French semiconductor material company, to the country.

Sun-Mi Kim kimsunmi@donga.com