The government is looking to China and other cash-rich emerging countries to invest in Korea’s fast-growing energy, technology and service sectors.
The Ministry of Knowledge Economy said Monday that Korea aims to draw more than $15 billion in foreign direct investment this year. It marks a 15 percent increase from a record-high $13 billion that arrived last year.
To achieve the goal, the government will provide more financial advantages and favorable business conditions for foreign investors, it said.
“While keeping up with the quantitative and qualitative progress we have made in 2010, we plan to promote FDI this year in a way that it can actually contribute to the domestic economy,” a ministry official said.
Seoul hopes to lure a large amount of the sum from emerging market countries including China, Russia and India, the ministry said.
The government will also take advantage of the prospective ratification of free trade agreements with U.S. and the European Union in securing access to nearby countries, it said.
The government will promote the country’s clean energy, services and industrial components industries by offering a better business environment for foreign firms.
The plan includes the further easing of regulations and offering more financial perks for foreign firms who launch businesses in the country’s industrial clusters and free economic zones, according to the ministry.
Foreign firms will become eligible for more tax breaks as well as administrative-related support if their investments top $10 million and $5 million for manufacturing and services companies, respectively.
Incentives include cash grants and assistance to secure necessary land, the ministry said. Seoul has set aside 14 billion won ($12 million) worth of funds that can be given out as direct cash grants this year.
Korea has designated six FEZs in the country since 2003 to attract more foreign direct investment and develop the nation as a Northeast Asian business center.
The six FEZs are located in Incheon, Busan-Jinhae, Gwangyang, West Sea coastal regions, Daegu-Gyeongbuk and Saemangeum-Gunsan.
Yet the government has been struggling to invigorate the FEZs as they have not been living up to expectations so far. The FEZs had drawn only around $2.9 billion in foreign investment as of last year, according to the ministry.
Meanwhile, the ministry said last year was a turning point in terms of the country’s foreign direct investment. The sum for 2010 was the highest since $15.26 billion in 2000 and the first time in six years that FDI has surpassed the $12 billion mark.
The ministry said that the government’s efforts to build new green growth industries fueled overseas investments in areas such as biomedicine, solar energy and wind power generation.