The Ministry of Knowledge Economy said on Thursday that it will provide support packages to Korean small and medium enterprises doing business overseas that return to their homeland.

The plan came as part of the government’s efforts to create jobs at home and to stimulate domestic consumption.

“The package will include administrative support, benefits for land rental and tax incentives,” said Kim Sang-woo, an official from the ministry.

He added that the ministry will treat those companies as foreign direct investors in cooperation with local governments.

The ministry also has sent a bill to the Assembly to offer comprehensive support to SMEs considering making a “U-turn” back to Korea from next year.

The government has boasted success in its initiative to attract Korean companies abroad back to their home turf.

Last August, 14 Korean jewelry companies moved from China to Iksan, North Jeolla Province.

Most of those companies had moved their factories to China in the early 1990s to take advantage of low labor costs.

But companies are losing their cost-cutting edge in China due to rising wages there over the past decade.

Now they are shifting their focus back to Korea, which in the meantime has enhanced its export environment with multiple free trade agreements.

The ministry said it will target three cities for the rest of the year to lure more Korean companies from abroad. Cheongju, North Chungcheong Province, will support returning fashion industry SMEs, while Gongju, South Chungcheong Province, and Busan will target textile firms and shoemakers, respectively.

By Seo Jee-yeon (jyseo@heraldcorp.com)