Published : 2013-09-26 20:20
Updated : 2013-09-26 20:20
The government’s plan to renovate aging industrial complexes and create new high-tech factory parks, which was unveiled Wednesday, should help improve the unfavorable local business environment that has been pushing many Korean companies to move their production facilities abroad.
According to figures from the Ministry of Trade, Industry and Energy, there are currently 993 industrial estates across the country, housing 67,895 firms that account for 65 percent and 76 percent of the country’s manufacturing output and exports, respectively. Since the first was built on the western outskirts of Seoul in 1964, industrial complexes have contributed to the rapid growth of Korea’s export-oriented economy.
But the number of manufacturers housed at industrial parks has been steadily decreasing in recent years, with a 2012 survey showing nearly a quarter of them considering transferring their factories overseas. A separate poll of 700 Korean companies operating production facilities abroad, which was released last month, also highlighted the need to enhance the business environment in the country. About 80 percent of them said conditions for running their plants were more favorable overseas than at home. A meager 1.5 percent had the intention to return to Korea in the near future.
It is hoped that the plan for revitalizing industrial complexes, which was announced as part of measures to boost investment, will help prevent an accelerated corporate exodus and encourage Korean companies operating their plants abroad to make a U-turn. Overseas investment by Korean firms increased by 16.1 percent from a year earlier in 2012, while inbound investment here rose at a slower pace of 7.3 percent.
Under the plan, the government will revamp up to 25 aged industrial complexes by 2017 and create nine others focused on high-tech sectors, including three in the Seoul metropolitan area, by 2015.
Its success is seen to hinge on, among other things, whether and how to draw a sufficient number of young qualified workers to work at companies in those factory parks. Companies polled in the 2012 survey cited difficulty in finding new employees as the largest reason for them to consider moving overseas.
A recent poll of college students showed that more than two-thirds of them are reluctant to work at an industrial complex. Their reluctance was attributed mainly to noneconomic factors such as the lack of convenience facilities, opportunities to enjoy cultural life and adequate public transportation, with slightly over 12 percent citing low wages.
The government needs to draw up and implement comprehensive and sophisticated measures to ensure clean and comfortable living conditions for workers and their family members.
Efforts should also be strengthened to abolish excessive government regulations and offer more tax incentives and financial support to manufacturing companies moving to industrial complexes.