Korea to relax development restrictions, boost construction

President Yoon Suk Yeol speaks during public debates. [Photo by Lee Seung-hwan]

South Korea will significantly relax development restrictions, particularly in greenbelt areas, and grant a 100 percent reduction in development fees for non-metropolitan areas to stimulate the construction industry.

These measures were unveiled when President Yoon Suk Yeol received his first policy briefing of 2024 at a human resource development center run by the Korea Federation of Small and Medium Business in Yongin, Gyeonggi Province on Thursday.

The key focus of the measures will be on lifting a large number of green belts in non-capital areas and easing land regulations so that companies can build more factories and houses to prevent a slowdown in the real estate market.

It is thus highly likely that the government will allow the release of green belts in areas with environmental assessment grades of 1 and 2 for national and public development projects. The closer the environmental assessment grade is to grade 1, the higher the conservation value of the area.

The government will also consider introducing an expedited greenbelt release system and excluding national strategic projects or regional urgent projects from the total release quota for accelerated development. It will also grant a temporary 100 percent reduction in development fees for non-metropolitan areas and a 50 percent reduction in school site fees in 2024 to boost investment conditions, the first time that school site fees have been reduced. Social indirect capital (SOC) projects will also be executed on a record scale, increasing to 26.4 trillion won in 2024 from the previous year’s 25 trillion won ($19.01 billion).

The government will also launch an 85 trillion won liquidity supply program to put real estate project financing (PF) businesses back on track. Measures to support exports, investments, and domestic consumption will also be implemented, with a record 355 trillion won to be provided to exporters via trade finance. The government will particularly expand support for the defense industry as a new growth and core technology sector. Currently, the tax deduction rate for general technology facility investment ranges from 3 percent to 12 percent, but industries classified as new growth and core technology sectors see much higher deduction rates of 6 percent to 18 percent.

“We will boldly and decisively address inconvenient regulations hindering corporate activities in 2024,” Yoon said. “We will transform into a government that swiftly resolves problems, rather than simply reviewing them.”

Yoon also expressed his commitment to a ban on short selling to protect individual investors. “Some people say that short selling will be prohibited until June 2024 and then lifted after the election, but this will not happen.” He emphasized that the prohibition would continue until a fully functional electronic system is in place to completely mitigate its side effects.