Foreign firms allowed to build plants in metropolitan area

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Foreign firms allowed to build plants in metropolitan area

 

June 17, 2005


Foreign-invested companies will be allowed to build new factories in 25 high-tech industries in Seoul and its adjacent areas by 2007 as a relevant enforcement decree was passed at the Cabinet meeting on May 17.

The revised decree to the 'act on industrial agglomeration activation and factory establishment' will go into effect as early as the week ending May 26, the Ministry of Commerce, Industry and Energy said. "The revision reflects the government's strong commitment to attracting more foreign investment," according to a ministry official who added the deregulation will boost foreign investors' confidence in the Korean market: "We expect to attract $800 million from eight foreign companies as a result of deregulation."

The act, established in 1994 to curb over-expansion in the region, bans conglomerates, both domestic and foreign, from building plants with more than 8 billion won in capital and 300 employees or more in the Seoul metropolitan area, including Gyeonggi Province. To attract foreign investment, the central government allowed a temporary exception for foreign high-tech companies for the past few years. The controversy over the rule surfaced as the grace period ended at the end of last year.

With the revision, besides 3M, two Japanese parts manufacturers, including NEG, are expected to proceed with their investment plans, officials from Gyeonggi Province said. The MOCIE had sought to iron out the controversy before an overseas road show to attract foreign investors, which will be held May 17-22.

 

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