Government Ready to Help Firms Come Back to Korea

The government will help Korean manufacturing companies operating in China, which plan to return to Korea thanks to the Korea-U.S. Free Trade Agreement, by supporting them financially and helping them resettle.

It has been confirmed that the administration, Korea Trade-Investment Promotion Agency (KOTRA), and the Industrial Bank of Korea (IBK) have currently entered into an agreement called, “A triangle support project for FTA reflux industry” which will give financial support to manufacturing companies. The project will be the first of a number of national support measures for industries as a result of the FTA.

The government plans to build free trade areas such as a mass industrial complex near ports for easy loading and unloading.

KOTRA will attract foreign investment for so-called “reflux” businesses and help exporters to contact buyers. Moreover, the IBK will provide low interest loans for funds used to lease a plant site, construct producing facilities, or move factories.

The administration and the IBK’s consulting experts on small- and medium-sized enterprises (SMEs) will open an overall management consulting service which will cover money circulation, financial affairs, and tax problems.

In the wake of these policies, the government hopes that the KORUS FTA will induce better competitiveness toward U.S. exports and an influx of Korean companies, including textile industries, back to Korea.

The Ministry of Finance and Economy projects that tariffs on 1,387 items, which comprise 61% of textile exports to the U.S., will be removed and that the export total will grow by more than 20% based on a document titled, “Influences and Effects of the FTA.”

The IBK Economy Institute late last year polled 166 SMEs operating in China and it found that 56% of the respondents suffered from high labor costs and various restrictions.

Meanwhile, the Industrial Bank of Korea has been preparing a new financial services package for reflux companies from China since late 2006 in anticipation of the settlement of KORUS FTA.

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