Ruling Party Vows to Support Manufacturing with 'Korean IRA'

The People Power Party plans to introduce a bill similar to the US Inflation Reduction Act (IRA), aiming to support domestic manufacturers in strengthening their competitiveness in key industries such as electric vehicles and batteries. This domestic production promotion tax system, dubbed the 'Korean IRA,' proposes to offer partial corporate tax deductions to companies producing items designated as national strategic technologies domestically.

The People Power Party stated that this system could protect the production base and create 100,000 jobs. Representative Jang Dong-hyuk expressed concerns about manufacturers moving overseas due to shifts in the global trade order and labor market rigidities. He cited the US IRA and similar systems in Japan, pledging to increase domestic production through direct compensation for production and sales performance.

The People Power Party's proposal aims to shift the policy focus from existing investment-centric support to production-based subsidies upon the introduction of the 'Korean IRA.' The government is expected to include this system in its tax revision bill for this year. Industry insiders believe the introduction of the 'Korean IRA' will significantly impact the finished vehicle, parts, and battery sectors, marking a shift from current investment-focused support to production-based subsidies. This initiative could serve as an opportunity to enhance the competitiveness of domestic manufacturing and promote economic revitalization.