As economic security, including supply chain stability, emerges as a key element of national competitiveness, countries such as the EU and the US are competitively introducing cash support measures for core industries. Government authorities are also stepping up efforts to attract foreign companies by announcing strengthened cash support measures to attract foreign investment in national strategic technology sectors.

The Ministry of Trade, Industry and Energy (MOTIE) announced on the 18th that it has revised the 'Operational Guidelines for Cash Support Systems' to expand foreign investment in key sectors of high-tech and supply chains, thereby raising the maximum limit.

In order to expand the attraction of foreign investment in key sectors of high-tech and supply chains, the Foreign Investment Committee decided to provide cash support of up to 50% of the investment amount for foreign investments corresponding to 36 national strategic technologies, such as semiconductors, secondary batteries, and vaccines, designated under the Restriction of Special Taxation Act, and increased the state contribution rate by up to 20 percentage points.

After the revision, support of up to 50% is also included for national strategic technologies, and the national cost-sharing rate has been increased. In the case of the capital area, the ratio of state funding to local funding has been raised to 50:50, while in non-capital areas, up to 80% of state funding can be shared.

The Ministry of Trade, Industry and Energy announced that it will provide up to an additional 10 percentage points of support when calculating the cash support limit for investments that contribute to major supply chains and carbon neutrality.

Reflecting the contribution to domestic industry, a basis has been newly established to reduce the cash support limit for foreign investments with low contribution to the domestic industry.

They added that this support excludes indirect investments involving the establishment of overseas entities using domestic capital and reinvestment domestically through those entities, and has supplemented the operation of the system by establishing clear evaluation criteria through the addition of quantitative assessments when evaluating eligibility for cash support.

In addition, shortcomings in the operation of the system were addressed, such as by imposing an obligation to secure collateral prior to cash disbursement.

Jeong Jong-young, Director General of Investment Policy, stated, “Supply chain instability has persisted recently due to the prolonged war between Russia and Ukraine and China’s COVID-19 lockdowns,” adding, “We plan to make active efforts to attract more high-quality foreign investment by utilizing the newly revised cash support system.”