Gyeonggi Province announced on March 21st that it made a request to the Ministry of Finance and Economy to include 51 tasks in 9 sectors, for example, easing regulation for newly constructing and expanding factories, in the [2nd Comprehensive Plan for Improvement of Business Environment]in order to facilitate investment, create jobs, and improve economic vitality.

After the Ministry of Finance and Economy announced on March 16 that it will lay out the [2nd Comprehensive Plan for Improvement of Business Environment]by June this year, Gyeonggi Province made proposals on March 20 after collecting and reviewing 51 cases related to factory establishment, factory location, SMEs, tax system, human resources, and others, which were submitted by the provincial office, 18 cities and counties in the province, and 8 economic institutions.

Through the proposal, Gyeonggi Province urged the government to dramatically alleviate regulations, stating, “due to various regulations relating to establishing and expanding factories, such as restrictions on newly building and expanding factories in metropolitan areas, and metropolitan factory cap system, many companies are experiencing setbacks in business and are suffering from difficulties.”

In particular, as the existing factories for 14 state-of-the-arts industries owned by conglomerates in the ‘growth management zone’ are allowed to expand facilities to a maximum of 100% of their existing building area, conglomerates are suffering from discrimination compared to foreign investment companies, and for this reason, the recent domestic facilities investment ratio has been on a continuous decline.

In addition, Gyeonggi Province demanded the government eliminate uncertainties in the foreign investment environment by extending the grace period for foreign investment firms in 25 industries to newly establish and expand factories until 2012, which is currently set temporarily to the end of this year.

Regarding SMEs and investment, Gyeonggi Province requested government subsidies in developing an SME-dedicated industrial zone, and nurturing the Kimchi industry, a traditional industry. Regarding foreign investment, the province proposed elimination of the limit in grace period (5 years) for foreign investment companies, and a rise in government subsidy ratio for rent zones dedicated to foreign investment companies.

Related to the tax system, the province suggested an increase in tax deductions for temporary investment, from the current rate of 7% to 10%, extension of its period (to 2009), reduction of minimum tax ratio for SMEs (10% -> 5%), and tax refund of local tax paid by foreign investment companies before tax reduction came into action.— to be continued