Government Lowers Barriers for Local Investment Subsidies... Newly Established Corporations Also Eligible

Ministry of Trade, Industry and Energy Revises Local Investment Promotion Subsidy Guidelines
Additional 2 Percentage Points in Subsidies for Companies Procuring 70% or More Domestic Equipment

Yonhap News Agency

The government will expand the eligibility criteria for local investment promotion subsidies and ease support standards in order to encourage companies to increase investment in regional areas. The threshold for receiving subsidies will be lowered so that newly established subsidiaries and joint ventures are also eligible, and additional incentives will be granted to companies that introduce a certain percentage or more of domestically produced equipment.

The Ministry of Trade, Industry and Energy announced on July 19, 2026, that a partial revision of the “Standards for Fiscal Support from the National Government for Local Governments' Attraction of Local Investment Companies (Local Investment Promotion Subsidy Notice)” containing such provisions will take effect from July 20.

The Local Investment Promotion Subsidy is a system under which the central and local governments jointly support a certain percentage of investment amounts for companies relocating out of the greater Seoul area or making new or expanded investments in regional areas. This amendment was prepared to address on-site challenges faced by companies, to revise the scope and management standards to reflect current realities, and to induce the adoption of domestically produced equipment.

First, the requirements for subsidy application will be eased. Previously, only companies that had been in operation for one year or more were eligible for support, but now newly established subsidiaries and joint ventures that have operated for less than a year will also be able to apply. Including local investments made by newly established corporations as eligible investments is aimed at encouraging more active investment.

Restrictions on companies that lease part of their facilities will also be relaxed. Until now, if a business that received a subsidy leased any part of the facility invested in, it was not eligible to apply for the subsidy. Going forward, companies will be able to apply for subsidies for investment made in areas other than the portions scheduled to be leased out.

The criteria for post-subsidy management will also be reasonably adjusted. Previously, companies that received subsidies were required to maintain the employment and size of all existing workplaces nationwide, regardless of the new investment project. In the future, this obligation will apply only to existing facilities engaged in the same industry as the new investment project.

Incentives for adopting domestically produced equipment will also be newly introduced. Companies that procure at least 70% of the cost of machinery and equipment from domestic sources will receive an additional 2 percentage points in subsidy support. This measure is designed to strengthen the competitiveness of the domestic equipment industry and reinforce supply chain ecosystems.

In addition, the cost of purchasing used equipment, which had previously been excluded from investment recognition, will now also be recognized as investment. This is intended to reduce the investment burden on companies and broaden their choices for facility investments.

The revised notice will apply to subsidy applications received from July 20, the effective date of implementation. Companies may apply to the Ministry of Trade, Industry and Energy for subsidies through the local government that has jurisdiction over their planned investment region.

An official from the Ministry of Trade, Industry and Energy stated, "We will continue to actively support corporate investment in regional areas and, at the same time, strengthen post-support management for subsidized companies to further revitalize local economies."

This content was produced with the assistance of AI translation services.