How can international projects access the region's slowly increasingnumbers of subsidies and incentives' JEAN NOH explores the key entrypoints
Film industries in Asia are comparatively young and less developed than their Western counterparts, where government subsidies and tax incentives are available more readily.
Therefore the major reasons for shooting in Asia have usually had more to do with tapping into growth markets and low costs.
However, pockets of soft money do exist as governments look to attract international shoots, both for the inward investment and to give their local workforces more experience.
And it is not always necessary to work under co-production treaties to access incentives in this entrepreneurial region.
Although South Korea's film development policies have often been referred to as a model for other countries, the past two or three years have seen the local industry running into what Korean Film Council (KOFIC) chairman Kang Han-sup describes as 'a depressive crisis'.
Among other solutions, Kang points to a vision of an expanded market with Asian countries in particular sharing talent, ideas, technology and box office.
It is estimated the majority of South Korea's film-making workforce are currently either unemployed or working in related sectors such as TV or advertising.
These skilled workers could be put to good use on co-productions. Korea's CGI and post-production sector, which has experience on high-quality effects-driven films such as D-War, The Restless and The Host, is also on the lookout for international work.
Since last year, several of Korea's regional film organisations have started to offer locations incentives, such as a scheme launched by the Seoul Film Commission which will refund 25% of production expenditures accrued in the city, up to a maximum of $100,000 per project (see listings on pX for details of more incentives).
In addition, Korea's Gyeonggi province has launched an initiative to promote co-ventures with Hollywood, which includes a $100m fund for films, animation and games projects with global appeal.
South Korea has only one film co-production treaty - with France - but co-productions do not need to go through treaties to apply for KOFIC's local support programmes, or for investment from KOFIC-supported funds. KOFIC has score-card guidelines giving points for elements such as origin of director, cast, script and financing.
For example, Kwak Jae-yong's Cyborg She, which has a Korean director, co-producer, script and post-production done in Korea, fulfilled enough requirements to receive investment from Korea's Centurion Movie & Knowledge 3rd Investment Fund, despite being shot in Japan with a Japanese cast.
However Three Kingdoms: The Resurrection Of The Dragon was disqualified despite 90% Korean financing, because almost everything else came from Hong Kong/China.
'Since 2005, KOFIC has also been running a $400,000 support programme for international co-productions which benefited films such as Hong Sang-soo's Tale Of Cinema [co-produced with France's MK2]. But we're looking into creating a larger international co-production film fund next year,' says Jeon Yoon-hyung, manager at KOFIC's international promotion department.
Singapore
Singapore offers a raft of incentives which are designed to develop the city state as a media financing hub. In addition to encouraging private-sector involvement in the film industry (see sidebar opposite), Singapore's Media Development Authority (MDA) offers various subsidies that are open to international co-productions, ranging from project grants to the Scheme for Co-investment in Exportable Content (SCREEN).
Also, the Singapore Tourism Board runs the Film in Singapore! Scheme (FSS) which subsidises up to 50% of costs incurred while filming in the city state and has supported projects such as Dance Of The Dragon, directed by Max Mannix.
'In Singapore we're developing media from the economic benefits perspective, but also to promote cultural diversity - a two-pronged initiative,' says MDA deputy director, business development Michelle Lui. 'We're trying to develop international partnerships in all different media, for example with co-production agreements with Canada, New Zealand, Australia, Korea and Italy.'
Hong Kong
In sharp contrast, Hong Kong has always relied on its close links to China - and its favoured status under the CEPA trade agreement - rather than incentives when it comes to attracting international partners. 'Hong Kong has always been more focused on the commercial aspect of film-making,' says Wellington Fung, secretary -general of Hong Kong's Film Development Council (FDC).
The FDC oversees the $38m Film Development Fund, which aims to support low and medium-budget films in order to support a new generation of film-makers. Co-productions are eligible for the fund, but the mainstay of each project needs to be a Hong Kong entity and projects need to employ a certain proportion of local talent. The fund targets films with budgets less than $1.6m (HK$12m), with support capped at 30% of the budget.
Aside from the fund, the FDC offers loan guarantees to film producers, but there are no tax incentives as corporate and individual tax rates are low and there is no sales tax in Hong Kong.
Taiwan
Taiwan's Government Information Office (GIO) has experimented with tax breaks, but its initial 20% tax credit ended up supporting local companies. The GIO now runs a scheme under which foreign productions spending more than $100,000 in Taiwan can be reimbursed at 15%-20% of local cast and crew salaries, 5% of transport and accommodation expenses and 15% of local production and post-production costs.
'Taiwan's production incentives have mainly been for local artists and Chinese-language productions,' says Steve Chicorel, vice-president at Taipei-based Double Edge Entertainment. 'But they should try to bring in more activity the way Canada and Australia did, by opening up to international productions. You get huge growth economically, educationally and experience-wise that ultimately benefits local talent.'
He adds: 'We're working on a film set in Japan and China which was supposed to do coverage for this in Taiwan, but we opted for Vancouver where we can get 45% [back]. We're also setting up three films in Korea where we are getting much more than incentives because we are also accessing equity funding.'
Thailand
In Thailand, where international film-makers have benefited from low costs and experienced crews for decades, the government is working on creating a tax-free zone for foreign film-making as well as a tax-reduction and refund system. However, the country's current political instability raises questions about their feasibility.
Steven Squillante, executive producer on The Weinstein Company's Shanghai, which recently wrapped in Thailand, suggests the country could benefit from waiving its 7% sales tax.
'Getting rebates out of governments can be tough,' he says. 'But if they could just waive the VAT then right away you get 7.5% back. Then if you can find a way to get another 3%-7.5%, you get 10%-15% back and that would put Thailand in a position where it is amazingly competitive.' Squillante adds that Thailand is already competitive in terms of logistics and costs.
Japan
Japan's Agency for Cultural Affairs (Bunka-Cho) offers subsidies of at least $414,000 (¥50m), capped at one third of total production costs, to eligible international co-productions. Films to have taken advantage of the initiative include Canada-Italy-Japan co-production Silk, starring Keira Knightley.
But the Japanese market remains insular as local producers can recoup at home and there is little interest in attracting offshore production. 'Tax and subsidies are not such effective incentives for international co-productions for Japanese producers at this moment,' says Takashi Uchiyama, an adviser at the Visual Industry Promotion Organisation (VIPO). 'The market attractiveness and/or cultural merit of each project are considered important instead.'
However, even Japan, which Uchiyama says runs the risk of becoming the 'Galapagos Islands of international co-production', is coming out of its shell. More co-financing deals are being struck as local production budgets rise and it becomes more expensive to acquire foreign product. But in keeping with Asia's entrepreneurial spirit, very few of these deals rely on soft money.
Film industries in Asia are comparatively young and less developed than their Western counterparts, where government subsidies and tax incentives are available more readily.
Therefore the major reasons for shooting in Asia have usually had more to do with tapping into growth markets and low costs.
However, pockets of soft money do exist as governments look to attract international shoots, both for the inward investment and to give their local workforces more experience.
And it is not always necessary to work under co-production treaties to access incentives in this entrepreneurial region.
Although South Korea's film development policies have often been referred to as a model for other countries, the past two or three years have seen the local industry running into what Korean Film Council (KOFIC) chairman Kang Han-sup describes as 'a depressive crisis'.
Among other solutions, Kang points to a vision of an expanded market with Asian countries in particular sharing talent, ideas, technology and box office.
It is estimated the majority of South Korea's film-making workforce are currently either unemployed or working in related sectors such as TV or advertising.
These skilled workers could be put to good use on co-productions. Korea's CGI and post-production sector, which has experience on high-quality effects-driven films such as D-War, The Restless and The Host, is also on the lookout for international work.
Since last year, several of Korea's regional film organisations have started to offer locations incentives, such as a scheme launched by the Seoul Film Commission which will refund 25% of production expenditures accrued in the city, up to a maximum of $100,000 per project (see listings on pX for details of more incentives).
In addition, Korea's Gyeonggi province has launched an initiative to promote co-ventures with Hollywood, which includes a $100m fund for films, animation and games projects with global appeal.
South Korea has only one film co-production treaty - with France - but co-productions do not need to go through treaties to apply for KOFIC's local support programmes, or for investment from KOFIC-supported funds. KOFIC has score-card guidelines giving points for elements such as origin of director, cast, script and financing.
For example, Kwak Jae-yong's Cyborg She, which has a Korean director, co-producer, script and post-production done in Korea, fulfilled enough requirements to receive investment from Korea's Centurion Movie & Knowledge 3rd Investment Fund, despite being shot in Japan with a Japanese cast.
However Three Kingdoms: The Resurrection Of The Dragon was disqualified despite 90% Korean financing, because almost everything else came from Hong Kong/China.
'Since 2005, KOFIC has also been running a $400,000 support programme for international co-productions which benefited films such as Hong Sang-soo's Tale Of Cinema [co-produced with France's MK2]. But we're looking into creating a larger international co-production film fund next year,' says Jeon Yoon-hyung, manager at KOFIC's international promotion department.
Singapore
Singapore offers a raft of incentives which are designed to develop the city state as a media financing hub. In addition to encouraging private-sector involvement in the film industry (see sidebar opposite), Singapore's Media Development Authority (MDA) offers various subsidies that are open to international co-productions, ranging from project grants to the Scheme for Co-investment in Exportable Content (SCREEN).
Also, the Singapore Tourism Board runs the Film in Singapore! Scheme (FSS) which subsidises up to 50% of costs incurred while filming in the city state and has supported projects such as Dance Of The Dragon, directed by Max Mannix.
'In Singapore we're developing media from the economic benefits perspective, but also to promote cultural diversity - a two-pronged initiative,' says MDA deputy director, business development Michelle Lui. 'We're trying to develop international partnerships in all different media, for example with co-production agreements with Canada, New Zealand, Australia, Korea and Italy.'
Hong Kong
In sharp contrast, Hong Kong has always relied on its close links to China - and its favoured status under the CEPA trade agreement - rather than incentives when it comes to attracting international partners. 'Hong Kong has always been more focused on the commercial aspect of film-making,' says Wellington Fung, secretary -general of Hong Kong's Film Development Council (FDC).
The FDC oversees the $38m Film Development Fund, which aims to support low and medium-budget films in order to support a new generation of film-makers. Co-productions are eligible for the fund, but the mainstay of each project needs to be a Hong Kong entity and projects need to employ a certain proportion of local talent. The fund targets films with budgets less than $1.6m (HK$12m), with support capped at 30% of the budget.
Aside from the fund, the FDC offers loan guarantees to film producers, but there are no tax incentives as corporate and individual tax rates are low and there is no sales tax in Hong Kong.
Taiwan
Taiwan's Government Information Office (GIO) has experimented with tax breaks, but its initial 20% tax credit ended up supporting local companies. The GIO now runs a scheme under which foreign productions spending more than $100,000 in Taiwan can be reimbursed at 15%-20% of local cast and crew salaries, 5% of transport and accommodation expenses and 15% of local production and post-production costs.
'Taiwan's production incentives have mainly been for local artists and Chinese-language productions,' says Steve Chicorel, vice-president at Taipei-based Double Edge Entertainment. 'But they should try to bring in more activity the way Canada and Australia did, by opening up to international productions. You get huge growth economically, educationally and experience-wise that ultimately benefits local talent.'
He adds: 'We're working on a film set in Japan and China which was supposed to do coverage for this in Taiwan, but we opted for Vancouver where we can get 45% [back]. We're also setting up three films in Korea where we are getting much more than incentives because we are also accessing equity funding.'
Thailand
In Thailand, where international film-makers have benefited from low costs and experienced crews for decades, the government is working on creating a tax-free zone for foreign film-making as well as a tax-reduction and refund system. However, the country's current political instability raises questions about their feasibility.
Steven Squillante, executive producer on The Weinstein Company's Shanghai, which recently wrapped in Thailand, suggests the country could benefit from waiving its 7% sales tax.
'Getting rebates out of governments can be tough,' he says. 'But if they could just waive the VAT then right away you get 7.5% back. Then if you can find a way to get another 3%-7.5%, you get 10%-15% back and that would put Thailand in a position where it is amazingly competitive.' Squillante adds that Thailand is already competitive in terms of logistics and costs.
Japan
Japan's Agency for Cultural Affairs (Bunka-Cho) offers subsidies of at least $414,000 (¥50m), capped at one third of total production costs, to eligible international co-productions. Films to have taken advantage of the initiative include Canada-Italy-Japan co-production Silk, starring Keira Knightley.
But the Japanese market remains insular as local producers can recoup at home and there is little interest in attracting offshore production. 'Tax and subsidies are not such effective incentives for international co-productions for Japanese producers at this moment,' says Takashi Uchiyama, an adviser at the Visual Industry Promotion Organisation (VIPO). 'The market attractiveness and/or cultural merit of each project are considered important instead.'
However, even Japan, which Uchiyama says runs the risk of becoming the 'Galapagos Islands of international co-production', is coming out of its shell. More co-financing deals are being struck as local production budgets rise and it becomes more expensive to acquire foreign product. But in keeping with Asia's entrepreneurial spirit, very few of these deals rely on soft money.
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