In September 2012, the government of Republic of Korea announced a change in its trade finance instruments.



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Korean Ministry of Strategy and Finance:

Inception date: 25 Sep 2012 | Removal date: open ended

Trade finance

On September 25, 2012, the Korean Ministry of Strategy and Finance announced the results of the '6th Economic Revitalization Meeting', mainly consisting of tax incentives and fiscal support for Korean small- and medium-sized enterprises (SMEs).

The government's investment in SOC projects will be increased from 23.1 trillion won (US$ 20.7bn) to 23.9 trillion won (US$ 21.4bn), and trade financing will be increased from 270 trillion won (US$ 241.4bn) to 300 trillion won (US$ 268.2bn). Competitive SMEs and high value-added service industries will receive special support in 2013, with 55 billion won (US$ 49.2m) assigned to competitive SME support and 25.2 billion won (US$ 22.5m) assigned to next generation web technology development. Regional economies will receive financial support of 225.5 billion won (US$ 201.6m), which will help them develop their own competitive competencies. A total of 1,234.7 billion won (US$ 1.1bn) will be invested in free economic zones, industrial complexes and research complexes.

In addition, SMEs and exporters will receive expanded tax incentives. SMEs earning 10 billion won or less a year will be exempt from regular tax audits, which will expand the number of companies receiving benefits to 410,000. Prior to this change, the tax exemption used to be given to businesses earning one billion won or less annually.

In 2013, SME financial support will be increased by at least 10.3 trillion won (US$ 9.2bn) to more than 180.4 trillion won (US$ 161.3bn). The support will include around 26 trillion won (US$ 23.2bn) for facilities investment, 4 trillion won (US$ 3.6bn) for R&D and new growth engine-related investment, and 10 trillion won (US$ 8.9bn) worth of account receivable insurance. Loans backed by intellectual properties for SMEs owning advanced technologies will be newly adopted, and incentives for domestic companies returning to Korea will continue.

The press statement also included the following remark " Domesticcompanies moving their overseas production facilities back to Koreawill be subject to a simplified clearance process, both in terms ofinspection and documentation."