IV. System of Designating Foreign Investment Zones A. Designation of a Foreign Investment Zone For the purpose of promoting foreign investment that falls under the scope of the following standards, if necessary, the head of the local government may designate an area where a foreign investor desires to invest as a Foreign Investment Zone. 1. In cases where a foreign investor establishes new manufacturing facilities for the purpose of operating a manufacturing business or a business eligible for tax reduction or exemption and such businesses meets any of the following criteria: (a) Investment in the amount of US$100,000,000 or more; (b) Ownership of 50 percent or more by a foreign investor of the foreign-invested enterprise and the employment by such enterprise of 1,000 or more new workers; (c) Investment in the amount of US$50,000,000 or more and employment of 500 or more new workers; or (d) Investment in the amount of US$30,000,000 or more and employment of 300 or more new workers in the case where a state or local industrial complex whose development is completed, in whole or in part, is designated as a Foreign Investment Zone. 2. In cases where investment in the amount of US $30,000,000 or more (except in the case of the general recreation business mentioned below where investment in the amount of US$50,000,000 or more) is made and such cases meet any of the following criteria: (a) A tourism hotel business as provided for in the Tourism Promotion Act; (b) A general recreation business as provided for in the Tourism Promotion Act (provided that such business is operated within Cheju Island or the areas stipulated by the Minister of Finance and Economy); or (c) Where new facilities are established for the purpose of operating international conference facilities in accordance with the Act on International Conference Business Promotion. B. Special Regulations for Foreign Investment Zones 1. With respect to facilities established within a Foreign Investment Zone, penalties for traffic increase shall be exempted. 2. Support for medical facilities, educational facilities, housing and the like within a Foreign Investment Zone shall be provided. 3. In the case where land is divided within a Foreign Investment Zone, the relevant laws and regulations shall not apply thereto. 4. With respect to a foreign-invested enterprise that moves into a Foreign Investment Zone, the restrictions on such enterprise's import and export of goods shall be reduced, given that such foreign investor shall have been deemed to have reported its desire to conduct a trading business or act as a trading business agency. 5. With respect to a foreign-invested enterprise that moves into a Foreign Investment Zone, the laws and regulations on the protection of small- and medium-sized enterprises or on the mandatory employment, etc., of persons of distinguished service to the state, shall not apply thereto.
V. Procedures for the Sale or Lease, and Rent Exemption, of National or Local Government Property A. Notwithstanding the provisions of the relevant laws and regulations, land, factory or other state and public property owned by the national or local governments shall be accessible for use, profit-making, lease or purchase by foreign-invested enterprises. In addition, notwithstanding the provisions of the relevant laws and regulations, a foreign investor may lease state or public properties for 50 years and extend the term of such a lease. B. The Minister of Finance and Economy or competent government office dealing with state-owned land shall be authorized to (i) exempt total rent in cases where a foreign-invested enterprise, operating a business within a Foreign Investment Zone or whose investment amount is at least US$1,000,000 and whose business is eligible for tax reduction or exemption, leases state properties within such zone or a foreign-enterprise-use-only complex pursuant to the Industrial Layout and Factory Construction Act, (ii) reduce rent by 75 percent in cases where a foreign-invested enterprise, whose investment amount is at least US$10,000,000 and is engaged in a manufacturing business or which operates a business set forth by the Minister of Finance and Economy among businesses making substantial contributions to secure social overhead capital, adjust the industrial structure, make the local government financially independent and the like, leases state properties, and (iii) reduce rent by 50 percent in cas es where a foreign-invested enterprise leases state property located within a state industrial complex pursuant to the Industrial Location and Development Act. Provided that the reduction or exemption ratio for property eligible for rent reduction or exemption by the local government shall be determined pursuant to the regulations of such local government after considering the extent to which such foreign investment has an influence on the creation of employment, transfer of technology and financial independence of the local government.
VI. Special Treatment of Cases Involving Matters Subject to Civil Petitions A. If a foreign investor or a foreign-invested corporation obtains approval with respect to a certain matter subject to civil petition, he or she shall be deemed to have obtained permission with respect to all relevant matters subject to the civil petition. For example, if he or she obtained approval for the establishment of a factory pursuant to the Industrial Layout and Factory Construction Act, he or she shall be deemed to have obtained permission for 26 items of matters subject to such civil petition including permission for the diverted use of agricultural land, and if he or she obtained permission for construction pursuant to the Construction Act, he or she shall be deemed to have obtained permission for 27 other matters subject to such civil petitions. B. The period for treatment concerning matters subject to civil petition is largely shortened notwithstanding provisions of an individual Act, and if there has been no notice of refusal against permission within such a period, the permission shall be deemed to be given on the following day of the expiration date of such a period. C. In the event a foreign investor or a foreign-invested corporation desires to obtain permission for a certain matter subject to civil petition, he or she needs only to submit documents required under the FIPA, notwithstanding the provisions of any other laws.
VII. Others A. In cases where a foreign-invested enterprise which desires to operate a manufacturing business apportions farm land or apportions or changes the nature of forest land for the purpose of establishing a factory, charges for such apportionment shall be reduced or exempted on the basis of its foreign investment ratio. B. Under the Commercial Code, contributions in kind of either the industrial property right or the license to use such right is theoretically permitted, but such was not implemented in practice due to the difficulty of evaluation. However, FIPA provides for an evaluation method which now allows such right to be implemented in practice. C. Under the Commercial Code, distribution of dividends is prohibited from exceeding one-half of the total amount of distribution of profit, but a foreign-invested corporation may distribute dividends up to the total amount available for distribution of profit. D. With regard to in-kind contributions, the Commercial Code requires the court to appoint an inspector to evaluate the adequacy of the value of the contribution, but in the case of contribution of capital goods by a foreign investor, confirmation by the Administrator of Customs Office may replace the inspection requirement under the Commercial Code, and in the case of contribution of industrial property rights, evaluation by a technical evaluation institute designated by the Presidential Decree may replace the same requirement. E. A corporation may implement its asset revaluation as of the first date of each fiscal year pursuant to the Assets Revaluation Act, but a foreign-invested corporation may implement its asset revaluation as of the first day of each month. F. A foreign investor or a foreign-invested enterprise may entrust an investment support center with the preparation or submission of several documents necessary for the relevant authorization or permission, and the head of such center shall process the documents by transferring them to the head of the institution having authority over the approval process. G. If necessary to promote foreign investment, the local government may provide a foreign-invested enterprise with a grant for its employee support fund in accordance with its bylaws. For more details, please contact |
