Korea will implement packages in a new incentive program to encourage multinational companies to establish their Asian headquarters in the nation during the second half of this year, officials said Thursday.

The Ministry of Trade, Industry and Energy revealed the plan after holding a meeting to discuss boosting foreign direct investment among officials from 17 state-run FDI-related organizations and 17 local governments.

“Previously, the government simply offered a cash reward to multinationals that relocated their Asian headquarters to Korea, but it is not enough to lure more regional offices of multinational companies,” ministry official Byun Young-man said.

“Reflecting a variety of demands from foreign investors, the ministry is developing a package-type incentive program, which will cover cash rewards linked to the amount of investment, reduction in land purchase or rental cost, easier process for visa issuance for foreign employees, and a supply of quality foreign schools.”

According to Byun, the program will also be applied to research and development centers of multinational companies.

The move came at a time when some multinational companies including Siemens, BASF and GE are planning to set up Asian headquarters or a growth foothold in Korea.

In addition, the ministry will adopt a quality-driven FDI evaluation system, considering how much foreign investment will contribute to the local economy. Based on the evaluation, the ministry will offer a different level of incentives to foreign investors.

“The FDI incentives had simply been linked to the investment amount, but besides the investment amount, the ministry will review the job creation effect of the FDI and their contribution to bringing innovation to the local economy,” the ministry said in a press release. It added it will continuously seek improvements of living conditions for foreign companies.

The ministry has made efforts to streamline FDI-related policies amid rising concerns of a fall in FDI attraction since the new government was launched last February.

Despite the intensifying geopolitical risk triggered by North Korea, FDI rose 44.7 percent to 3.39 billion won in the first quarter of this year from the same period last year, but the ministry isn’t sure if the trend will continue for the rest of the year due to volatile external conditions.

“Favorable and non-favorable conditions are mixed for FDI this year. A pick-up in the U.S. and Japanese economies is a good sign, but the falling Japanese yen is expected to hamper FDI,” the ministry said.

By Seo Jee-yeon  (jyseo@heraldcorp.com)