South Korea is to offer cash incentives to direct foreign investors in a bid to win back overseas money and boost job creation in an increasingly tight labour market.
Asia's fourth largest economy has been losing out in attracting foreign investment in recent years amid concern over militant trade unions, North Korea's nuclear ambitions and China's rise as a regional industrial powerhouse.
The finance ministry said in a statement on Sunday it would pay five to 15 percent of total direct investment in cash grants to direct foreign investors.
"The cash grant ratio would be determined (by) the effect on job creation, while the payment would be made either in one lump sum or in several instalments over the five years after the investment," the ministry said.
Domestic companies, hit by sluggish local consumption and investigations into political party funding, have scaled down business spending, clouding the country's economic outlook.
South Korea saw foreign direct investment (FDI) drop 29 percent to $6.47 billion in 2003, but aims to attract around $10 billion of investment this year.
FDI plans received in the first quarter rose 175 percent to $3.05 billion from $1.11 billion a year earlier, the commerce ministry said earlier this month.