The government designated core industries including semiconductors, artificial intelligence, biotechnology, shipbuilding and nuclear power as "growth engines" for each of the country's five metropolitan and three special zones, unveiling a National Land Transformation Strategy and a plan to nurture regional growth engines with concentrated fiscal, financial, tax and regulatory support. Regional companies will receive up to 50% additional tax credits on research and development and integrated investment depending on their location, and a new "growth engine special subsidy" will be created to support large-scale regional investment.
The government announced the measures on the 26th at a central-local cooperation meeting chaired by President Lee Jae-myung at Cheong Wa Dae. Growth engines were selected for each zone to foster strategic regional industries. The central region was assigned next-generation displays and semiconductors; the southwestern region, advanced semiconductor innovative manufacturing; the Daegu-North Gyeongsang region, advanced semiconductor materials and components; the southeastern region, aerospace and defense; North Jeolla Province, a green hydrogen platform; Gangwon Province, smart bio and medical devices; and Jeju, an integrated renewable energy system.
The government also prepared a package of support across seven policy areas — fiscal, financial, tax, institutional, technology, talent and infrastructure — to back the selected growth engines. The new growth engine special subsidy will provide sweeping support for large-scale regional investment, while the National Growth Fund, region-dedicated funds and policy financing will supply sufficient capital for corporate investment and growth in growth engine sectors. Regional companies will receive up to 50% additional deductions on R&D spending, integrated investment and domestic production tax credits depending on their location, and tax benefits for workers at regional small and medium-sized enterprises and for regional startups will be strengthened.
The government will also sharply ease regulations on corporate investment through mega special zones and launch regional growth engine task forces to provide close support for companies facing investment obstacles. A new "growth engine large-scale R&D" program will be created for consortiums formed by regional anchor companies and their partners, aimed at developing the provinces into centers for advanced technology development and demonstration. To expand the workforce, the government will train talent that companies need directly in the regions through package support for regional flagship national universities, industry-academia convergence districts and specialized graduate schools.
For a redesign of the national spatial structure, the government will complete Sejong's functions as an administrative capital, building a presidential office in the city by August 2029 and a National Assembly hall there by 2033. It will also create corporate-style advanced cities combining industrial complexes, R&D and residential functions, and pursue renewable energy self-sufficient cities linked to regional specialized industries, including RE100 industrial complexes, as well as a Saemangeum future industry hub tied to corporate investment.
To underpin regional vitality, the government will expand tax and subsidy support for companies relocating to or investing in the provinces and supply infrastructure such as electricity and water in line with corporate demand. It will also draw up measures to improve living conditions — housing, health care, education and child care, and culture — so that employees of relocating companies and institutions can settle stably. A "regional preference index" will be created and applied in the budget planning process, along with a balanced growth impact assessment system. Fiscal and financial support will be strengthened through the creation of a super-regional account, a revision of preliminary feasibility studies and private investment rules to favor the provinces, and a higher share of policy financing directed to regional areas.
A government official said the plan is to draw up regional growth engine development plans led by local governments within this year and to provide close support for key projects in each zone through a locally led growth consultative body involving local governments. The official added that the government will oversee and coordinate the National Land Transformation Strategy for locally led growth through a pan-government consultative council on national land transformation chaired by the prime minister, and will flesh out support plans by region and sector through close cooperation between central and local governments.
