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Korea`s image as global hub for free trade growing

Posted March. 13, 2012 05:12,   

한국어

Korea is emerging as a global hub for free trade in the wake of the conclusion of deals with the world`s top three economic blocs of the U.S., the European Union and the Association of Southeast Asian Nations.

Despite the economic downturn and the European debt crisis, Korea has seen a surge in inbound direct investment from European countries as well as those from Japanese and Chinese companies. Korean companies abroad are also seeking to return home, which will help create jobs, especially for younger people.

Marking the official start of the bilateral free trade deal with the U.S. Thursday, the Korean government will hold a briefing on helping Korean companies advance overseas while granting subsidies for Korean companies returning to the country.

The Knowledge Economy Ministry said Monday that inbound direct investment from the EU reached 5.03 billion U.S. dollars last year, up 57.4 percent from 2010. Direct investment from Japan rose 9.9 percent to 2.29 billion dollars and that from China grew 57.2 percent to 651 million dollars.

The rising volume of inbound investment is thanks to enhanced investment attractiveness linked to the imminent enactment of the free trade deal with the U.S. following the one with the EU in July last year.

Korean small and medium companies operating in China will shift their production facilities back to Korea to take advantage of a potential free trade deal with China. According to a joint survey by the ministry and the Korea Trade-Investment Promotion Agency on 400 small Korean companies that operate plants in Shanghai, Beijing, Qingdao and Tianjin, 27 companies (6.8 percent) said they want to transfer production facilities to Korea.

Textile and shoe manufacturers said they are especially willing to return to Korea take advantage of non-tariff benefits.

To bolster the role of Korea as a global free trade hub, the ministry started investment relations briefings for German companies in Hamburg and Nürnberg on Monday. A briefing will be held ahead of a trilateral summit among Korea, China and Japan in May.

The Korean government will also support returning companies that set up production facilities in non-Seoul metropolitan areas via leasing subsidies and extending tax benefits.

Morgan Stanley said in a report on the importance of free trade deals that Korea`s agreements will contribute to enhancing national competitiveness and increasing inbound foreign investments and consumer purchasing power. Korea will surely benefit as the first mover, it added.



sukim@donga.com