Samsung, however, did attempt to build a 170 thousand-pyeong semiconductor plant in Korea on in investment of $18 billion, but the plan was scrapped due to government restrictions on construction in Gyeonggi Province.

LG Electronics built a Plasma Display Panel (PDP) factory in Nanjing, China this year, and completed the construction of a laptop computer factory in Kunshan, China. LG now owns 34 factories abroad. The last factory the firm built in Korea, however, was constructed in May, 2001.

Companies that manufacture automobile parts succeeded in locally producing core parts, which had been imported, but have stopped building new factories in Korea. The halt in construction is due to a regulation to prohibits the construction or expansion of facilities in Seoul or Gyeonggi Province.

Kim Gwang-tae of Samsung Electronics complained that conditions for companies in Korea should be improved, to resemble Silicon Valley or Shanghai's Pudong area.

Korean investors are seeking profits elsewhere, as uncertain policies, restrictions, powerful labor unions, high wages and an anti-corporate culture reign in the country. Foreign investment in Korea has dropped to nil, and investors have begun to call the country a "factory hell."

Aggressive efforts by foreign countries to attract capital have snared local factories owners. The United States sent representatives from 11 states to Korea, desperate to capture investment deals. Covington, in the state of Georgia, sold 480,000 pyeong of land to SK Corp. for only a dollar in order for the company to build factories.

"The state built the roads, sewer and gas pipes for free, and said it will fund a million dollars for railroad construction within the factory," said Kim Ho-jin, of SK Corp. The factory would only employ 220 workers, but Georgia is nonetheless enthusiastic in its support. Alabama also promised Hyundai Motor Company US$252.8 million in incentives to construct a factory in the state.

China's Suzhou industrial complex is called the "heaven for factories." Forty-six of the world's 500 largest companies have factories within the complex. The factory site is provided for free and some taxes are exempted for five years. If the factories make no profit, they can pay only 50 percent of the additional taxes for the next five years. Suzhou also provides a one-stop service that delivers goods right to the factory and passes customs entry at the sites.

Samsung Electronics recently received a gift from the Mexican President Vicente Fox after moving its factory to Mexico's Carretta industrial complex: Samsung Electronics vice-chairman Yoon Jong-yong asked the Mexican government to lower the 25 percent tax on iron plates used for refrigerators, the tax was lifted in less than three months. When President Fox could not attend Samsung's completion ceremony for the factory due to health problems, he sent his personal plane to invite Samsung officials to his residence.

With such enticements from abroad, companies are turning their back on local investment. According to an analysis by the Bank of Korea on the balance sheets for the manufacturing industry, companies are making 46.6 percent more money from sales compared to 2001, but are investing only 45 percent of what they had two years ago.

The National Statistical Office said that companies' investment in facilities also decreased compared to last year. Kim Ki-seung of LG Economic Research Center warned that, "if companies do not start investing in facilities, exports will slow down during the third quarter."

Jeong Gap-young, the head of Yonsei University's Institute of East and West Studies, said that if companies continue to invest abroad, the nation's economic model will be "deformed," in which the nation develops while the unemployment rate in the country increases.

(Chosun Ilbo's Special News Team)