South Korea allocates $74.9 million to boost reshoring efforts in 2024

South Korea’s Ministry of Trade, Industry and Energy announced plans to allocate 100 billion won ($74.9 million) in 2024 to support local businesses in reshoring their production from overseas.

South Korea’s Ministry of Trade, Industry and Energy announced plans to allocate 100 billion won ($74.9 million) in 2024 to support local businesses in reshoring their production from overseas. This allocation represents a substantial 75% increase compared to the 57 billion won designated in 2023. The move aims to encourage domestic companies to bring their manufacturing operations back to South Korea, fostering economic growth and reinforcing the country’s industrial resilience.

In addition to the increased financial support, South Korea is introducing other incentives to facilitate reshoring efforts. Notably, businesses engaging in reshoring activities will now benefit from a corporate tax discount lasting for 10 years, extending beyond the previous limit of seven years. This extended tax relief is expected to make reshoring more financially attractive for companies.

For businesses investing in strategic industries crucial to South Korea’s technological advancement, such as semiconductors, displays, batteries, and vaccines, the government is offering enhanced subsidies. Companies making investments outside the greater Seoul area will receive a subsidy of 45%, a substantial increase from the previous 21%. Investments within the greater Seoul area will also receive a higher subsidy, now set at 26%.

Park Duk-ryul, the Director-General for Cross-Border Investment Policy, emphasized the importance of businesses returning to cutting-edge industries. He noted that such returns play a crucial role in revitalizing regional economies, driving investment, and employment, and securing export momentum for the nation.

The South Korean government’s proactive measures align with global trends of reevaluating supply chain strategies and fostering domestic production capabilities. As nations worldwide recognize the importance of industrial self-reliance, South Korea’s initiatives aim to position the country as a competitive hub for advanced industries, ensuring economic resilience and technological leadership in the long run.

The financial support and incentives provided by the government are expected to incentivize South Korean businesses to reconsider their manufacturing locations, contributing to the country’s economic stability and technological innovation. The success of these reshoring efforts will likely have ripple effects on employment, regional development, and the overall competitiveness of South Korea in the global market.