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April 25, 2024

Experts call for more incentives for high-tech companies to reshore

PUBLISHED : September 18, 2023 - 09:53

UPDATED : September 18, 2023 - 09:53

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Experts gathered at the National Assembly to call for fortifying reshoring policies, or policies that will support high-tech Korean companies to bring outsourced overseas operations back to Korea, as a part of the national agenda, amid increased demand to ramp up domestic economic security.

"The United States-China conflict and the consequent supply chain collapse experienced during the COVID-19 pandemic have raised awareness of the notion that reshoring for Korean high-tech industries should be dealt with as a key task for governments,” said Kim Joo-kwon, a professor of business at Konkuk University, during a debate session on the revitalization of reshoring high-tech Korean industries held at the National Assembly on Friday.

Experts raised concerns over reshoring policies that buck global trends by being excessively centered on supporting small and medium-sized companies and manufacturing industries.

Currently, the reshoring subsidy cap for companies in the Greater Seoul region stands at 15 billion won ($11 million), while for companies outside Seoul, Incheon and Gyeonggi Province, the cap is 30 billion won, according to Choi Hye-rin, a professor of international trade at Soongsil University.

Due to the limited subsidies, Choi illustrated that there is a lack of incentives for semiconductor, battery and electronics companies — whose investments can reach well into the trillions of won — to withdraw their overseas operations and have them return to Korea. As such, she accentuated that the amount in subsidies allowed must be increased for high-tech companies to have their overseas businesses return to Korea.

Out of the 24 companies that decided to retract their businesses from overseas last year, only a quarter of them were high-tech companies.

Experts said expanding support for high-tech industries to bring operations back to Korea will lead to an aggressive increase in the employment rate.

According to data from the Federation of Korean Industries, if the high-tech companies that are currently considering having their overseas operations return to Korea commit to the idea, it would increase domestic production by some 14 trillion won in the automobiles, electricity and electronics sectors, creating some 16,000 jobs in these sectors.

By Lee Yoon-seo (yoonseo.3348@heraldcorp.com)

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