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Korea Needs To Readjust Policies For Companies Operating Plants Abroad

By March 13, 2017 at 8:08 am
The value of South Korea's oil exports topped the value of its semiconductor exports in February. (Photo : Getty Images)

Korea needs to examine and readjust its policies in order to motivate companies which are operating plants abroad to return to the country. These policies should already include bigger and better tax benefits as well as financial support for relocation.

Some of the analysts just announced last Wednesday that Korea has to readjust its policies when it comes to those firms operating plants abroad. The country needs to imitate policies of Taiwan, United States and that of Japan. If Korea will not follow this, the country could continue to lose money and will face the higher rate of unemployment.

According to the Korea Trade-Investment Promotion Agency or the KOTRA, there are about 5, 780 Korean manufacturers which are operating abroad.  These companies have about 3 million people and workers as per Korea Times.

Then if Korea will be able to attract perhaps 10 percent of these companies to return to the country, it will be possible that Korea can create up to 290,000 of jobs. KERI researcher Yang Geum-seung also shared that it will likewise help solve the problem of youth unemployment as there are about 467, 000 young unemployed Koreans.

Despite the fact that Seoul was able to introduce the "U-turn" incentive policy four years ago, there were only 30 manufacturers which returned to Korea. They were able to invest approximately 160 billion won and were able to hire 1, 800 people.

This is actually opposite to the U.S. U-turn policy implemented by Barack Obama. This resulted in more than 150 companies which returned to the U.S. and created more than 600,000 jobs.

As shared by KOTRA and KERI, more than half of the companies which returned to Korea said that they were not really contented with the level of support for relocation by the government.  They even added that the relocation costs outweighed those that maintained their plants abroad even if they were given incentives.

These companies also complained about the higher costs of labor in Korea compared with inflexible and emerging markets. While these companies increase their investment overseas, Korea loses perhaps 24, 000 jobs in a year.

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