South Korea has designated Ulsan, Geoje, Mokpo and other cities reeling from the ailing shipbuilding business as emergency industrial zones, in line with its economic drive to boost employment and growth, the country’s chief economic policymaker said Tuesday.
The designation is a follow-up measure, as the cities were already subject to government subsidies and incentives due to the prolonged slump of the country’s once-prosperous shipbuilding industry.
“The newly designated areas will be subject to additional support measures such as a public sector employment initiative and a special warranty program for shipbuilding materials businesses,” Deputy Prime Minister and Finance Minister Kim Dong-yeon said in a meeting of economy-related ministers.
Ulsan is the location of the nation’s largest shipbuilder Hyundai Heavy Industries, while Geoje houses runner-up players Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering.
The minister also vowed efforts in promoting the corresponding regions’ specialized industries other than shipbuilding for the sake of sustainable and balanced growth.
Companies that start businesses in the designated regions are to have their corporate and income taxes exempted for the first five years, as well as discounts in government-owned land rental fees.
The support programs will be in effect for a year, after which the government will review the need to extend the period by another year, according to ministry officials.
“The government will at all times stay alert to various opinions, not only from the emergency industrial zones but also from other parts of the country that are weighed down by restructuring problems,” Kim said.
Most of the southern port cities included in the latest emergency measure were designated earlier in 2016 as economic zones subject to government subsidies, shipbuilding restructuring funds and special financing programs for small and medium-sized businesses.
Deputy Prime Minister and Finance Minister Kim Dong-yeon (second from left) on Tuesday chairs a meeting of economy-related ministers at Seoul Government Complex. (Yonhap)
But as regional economies continued to struggle, the corresponding local governments applied for additional support, the Ministry of Trade, Industry and Energy explained in a release.
“The budget required for these special zones was incorporated into the supplementary budget bill,” the ministry said, adding that it may use some of the state reserve fund if necessary.
Last week, the National Assembly passed an employment-dedicated extra budget bill worth 3.9 trillion won ($3.6 billion), marking the second case of an extra budget under the Moon Jae-in administration.
North Jeolla Province’s city of Gunsan, home to General Motors’ lackluster assembly plant, was also designated as an emergency response zone in April this year, amid a brawl concerning the US automaker’s decision to shut down its underutilized plant.
By Bae Hyun-jung (email@example.com