January 10, 2008

By Lee Hyo-sik
Staff Reporter, The Korea Times (www.koreatimes.co.kr)

The government is considering easing restrictions on industrial activities in Seoul and its adjacent areas in line with President-elect Lee Myung-bak’s pledge to spur corporate investment.

Over the past five years, the Roh Moo-hyun administration has made it difficult for large companies to expand investment in Seoul, Incheon and Gyeonggi Province, in the name of balanced regional development and environment conservation.

But many firms have moved their production facilities to China and other emerging Asian economies rather than relocate operations to provincial areas, contrary to the Roh administration’s policy intent.

President-elect Lee has said his administration will drastically reduce corporate regulations in the metropolitan area to allow businesses to set up plants and carry out other industrial activities in a bid to boost corporate investment and job creation.

The Ministry of Finance and Economy said Thursday that it is considering increasing the types of high-tech industries for domestic companies that are allowed to set up operations in Seoul and its surrounding areas.

Currently, only 14 types of high-tech businesses operated by local conglomerates are permitted to either build a new plant or increase existing facilities on a case-by-case basis. But foreign-invested firms with non-Koreans owning over 50 percent stake are allowed to do so for 25 different kinds of industries, including aerospace and optical fibers.

The ministry is contemplating raising the number of high-tech businesses allowed to local firms to 25. Also, it plans to ease restrictions on business activities in environment conservation zones, including areas surrounding reservoirs, to make it possible for the construction of large-scale leisure and tourism complexes.

“We included a list of measures aimed at relaxing rules governing corporate activities in the metropolitan area in our report to the presidential transition team on Monday. We have been examining such steps for quite some time. Nothing is new,” a ministry official said.

Early last year, Hynix Semiconductor, the world’s second largest memory chipmaker, wanted to expand its presence near its existing facilities in Icheon, Gyonggi Province, by investing 13.5 trillion won to increase synergy effects.

But citing regulations on the metropolitan area, the government demanded the chipmaker instead build additional chip manufacturing lines in North Chungchong Province.

Government disapproval drew strong protest from businesses as well as from the Icheon city government and its citizens. They urged the government to revise the law so that the memory chip company can expand operations near its existing site for corporate efficiency and job creation.

leehs@koreatimes.co.kr