Ministry of Trade Industry and Resources

At the 10th Central-Local Cooperation Council chaired by the President on August 26, 2026, the Korean government announced its plan to promote local-led growth, a set of growth engines selected for each region, and its decision to pursue a new strategy for balanced growth led by local governments.

National Land Transformation Strategy

Minister Im Ki-geun of the Office for Government Policy Coordination (OPC) presented the plan to promote local-led growth and outlined three strategies and eight tasks under the National Land Transformation Strategy, which calls for local governments to lead the redesign of regional industries and institutional frameworks.

1.    Redesigning the National Spatial Structure

    Establishing Sejong as a Fully Functioning Administrative Capital: The government will complete the Presidential Sejong Office by August 2029 and the National Assembly Sejong Complex by the second half of 2033. It will also build the institutional foundation needed to establish Sejong fully as the administrative capital.

    Developing Regional Hub Cities: The government will develop corporate-friendly high-tech cities that bring together industrial complexes, R&D facilities, and residential communities. It will also develop self-sufficient cities powered by renewable energy (including RE100 industrial complexes) linked to each region’s specialized industries, and develop Saemangeum as a future industry hub anchored by corporate investment.

    Expanding Nationwide Transport Links: The government will upgrade transport networks connecting hub cities to meet regional demand, including by expanding metropolitan rail and express bus services, and strengthen links between mega-regions by building out the high-speed rail network and ensuring the timely opening of major expressways.

2.    Developing Strategic Industries by Region

    Specialized Development through Growth Engines Under the “Five Mega-Regions and Three Special Self-Governing Provinces (5+3)” Initiative: The government will designate growth engines for each region and concentrate support on them. It will also launch a government-wide support system to accelerate implementation of the three megaprojects, including those involving semiconductors and AI.

    Establishing Mega Special Zones: The government will work with businesses and local governments to establish Mega Special Zones linked to regional growth engines. The zones will offer special regulatory treatment—including menu-based exemptions, demand-responsive deferrals, and upgraded regulatory sandboxes—and policy support packages to drive regional growth.

    Developing Regional Talent for Growth Engines: The government will select and support signature colleges for regional growth engines at national flagship universities. The selected colleges will train specialists to meet business needs and serve as research hubs. The government will also utilize vocational high schools, the regional talent development system (ANCHOR), AX research centers run jointly with businesses, and Korea Polytechnics campuses to support regional talent development at every stage.

3.    Laying the Foundation for Regional Vitality

    Promoting Investment and the Relocation of Businesses and Public Institutions: The government will expand tax incentives and subsidies for companies that relocate to or invest in the regions and ensure they have timely access to power, water, and other infrastructure. The government will also develop measures covering housing, healthcare, education, care, and culture to help employees of relocated businesses and institutions build stable lives in their new communities.

    Overhauling Support Systems to Prioritize the Regions: The government will develop a Regional Preference Index for use in budget planning and introduce a Balanced Growth Impact Assessment. To strengthen fiscal and financial support, the government will create a new account for mega-region projects, reform the preliminary feasibility study system and private investment rules to prioritize regional projects, and increase the share of policy financing allocated to the regions.

Going forward, a government-wide council on national land transformation, chaired by the Prime Minister, will oversee and coordinate the National Land Transformation Strategy for local-led growth, while the central and local governments work together to develop detailed support plans for each region and sector.

Developing Regional Growth Engines Linked to the Three Megaprojects

Minister JK (Jung-Kwan) Kim of the Ministry of Trade, Industry and Resources (MOTIR) unveiled a plan to develop regional growth engines around the three megaprojects. The plan identifies three or four growth engines for each region and sets out a seven-part policy support package. MOTIR selected the growth engines based on corporate investments such as the three megaprojects, regional strengths and growth potential, and alignment with national strategies.

    Following submissions by local governments in September 2025, MOTIR held around 100 consultations with them and gathered broad input from some 600 companies and regional experts.

1.    Growth Engines Selected for Each Region 

The selected growth engines are as follows:

    Central Region: Next-generation displays and semiconductors; high-value biopharmaceuticals and materials; advanced batteries; and future defense and transport systems. Building on the region’s advanced industrial base and capacity for innovative R&D, the government will develop the Central Region into a global hub for advanced strategic industries.

    Southwest Region: Future power systems; innovative manufacturing of advanced semiconductors; autonomous driving powered by AI; and next-generation vaccines and precision medicine. By combining the Southwest’s abundant renewable energy and AI demonstration infrastructure with large-scale investment in semiconductors, the government will develop the region into a semiconductor and AI cluster powered by renewable energy.

    Daegu–Gyeongbuk Region: Advanced materials and components for semiconductors; core materials and resource recycling for secondary batteries; advanced mobility components; and advanced AI robots. Drawing on the region’s ecosystem and competitive strengths in advanced materials and components, the government will develop Daegu–Gyeongbuk into a hub for advanced materials and components, as well as AI robotics.

    Southeast Region: Advanced shipbuilding and maritime transport; aerospace and defense; innovative manufacturing for future mobility; and next-generation nuclear power and energy. Building on the region’s top-tier manufacturing capabilities and fully integrated value chains, the government will develop the Southeast Region into a world-leading hub corridor for AI-driven manufacturing.

    Jeonbuk: Green hydrogen platforms; advanced robotics foundries; and agricultural biotechnology. By combining its renewable energy resources and agricultural biotechnology base with investment in hydrogen and robotics, the government will develop Jeonbuk into a platform for next-generation bioindustry and physical AI manufacturing.

    Gangwon: Smart biotechnology and medical devices; specialty semiconductors and ceramics; and clean resources and tourism. By strengthening Gangwon’s industrial capabilities in medical devices, food, and tourism and establishing AI data centers, the government will develop the region into an innovation hub for AI and clean industries.

    Jeju: Integrated renewable energy systems; small satellite systems; and clean biotechnology and wellness. Building on its ideal conditions for renewable energy demonstration, abundant clean resources, and base of private-sector space companies, the government will develop Jeju into a frontier testbed for future industries.

AI will be applied across all regions, as it is the foundational technology for all industries.

2.    Seven-Part Policy Support Package

The government will provide targeted support for the selected growth engines through Mega Special Zones and a seven-part package covering fiscal support, financing, tax incentives, regulatory measures, technology, talent, and infrastructure. Through this support, it will establish the growth engines as pillars of regional growth and develop each region into an industrial innovation hub that attracts businesses and talent.

    The government will introduce a special growth-engine subsidy for large-scale investment in the regions. Through the National Growth Fund, dedicated regional funds, and policy financing, it will provide businesses in the selected sectors with the financing they need to invest and grow. Companies in the regions will receive additional tax credits of up to 50 percent for R&D expenses, integrated investment, and domestic production, with the rate varying by region, while tax benefits will be expanded for employees of regional SMEs and for startups established in the regions.

    Mega Special Zones will significantly ease regulations on corporate investment, while regional growth-engine task forces will provide one-on-one support to resolve investment barriers. The government will also launch a large-scale R&D program led by consortia of regional anchor companies and their partners, making the regions centers for developing and demonstrating advanced technologies.

    The government will strengthen the workforce and industrial base needed for regional growth. To meet business demand for highly skilled workers, it will provide package support to regional flagship national universities and draw on industry–academia convergence districts and specialized graduate schools to train such talent locally. The government will also develop industrial hubs such as corporate-friendly high-tech cities, self-sufficient cities powered by renewable energy (including RE100 industrial complexes), and Manufacturing AI Transformation (M.AX) clusters, while expanding competitive industrial sites by ensuring the timely supply of power and water.

Local governments will formulate regional growth-engine plans by year-end, with a locally led growth council providing close support for key projects in each region. The government will also continue consultations with industry, labor groups, and relevant ministries and work with the National Assembly to advance legislation for Mega Special Zones.