Strong logistics is the key advantage that differentiates Korea from neighboring emerging economies, chief executives of foreign-invested companies operating here said on Wednesday.

The three classical incentives offered by host countries are tax reductions, site support and cash grants. Currently the Korean government charges no tax for the first 3-5 years, plus a 50 percent tax reduction for the following two years. It also provides land free of charge for 50 years and rent discounts, besides cash grant for labor, land, facilities and equipment.

But as competition over foreign investment intensifies among emerging countries, additional advantages ― such as logistics, facilities, manpower and technology ― are becoming bigger bait for foreign capital.

“Optimal conditions for logistics and the stable supply of raw materials from Gwangyang Steelworks were the driving factors for Mitsubishi’s investment in Korea,” said Lee Kee-chang, chief executive of PMC Tech, which has foreign investment from Japan’s Mitsubishi Corp.

The global provider of carbon and graphite industries is Korea’s largest and the world’s seventh-largest manufacturer of premium needle cokes.

“Korea is a small country but our logistics and infrastructure are exceptional,” said Han Ki-won, the head of Invest Korea, a subunit of the state-run Korea Trade-Investment Promotion Agency.

Incheon International Airport handles the second-biggest volume of cargo in the world, while Busan Port sees the world’s fifth-largest cargo volume.

By Chung Joo-won (joowonc@heraldcorp.com)