TITLE : FAQ on FDI in Korea 2023 (Q114~Q116)
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2024
2024-01-02
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■ FAQ on FDI in Korea 2023 (Q114~Q116)
Factory Establishment and Location
Q114 | If a company wishes to move into a foreign investment zone (FIZ), does the entire amount of the investment need to be executed by the time when the tenancy contract is signed? |
A114 | For a manufacturing company, not all of the minimum investmentamount needs to have arrived when the tenancy contract is signed. |
- According to Article 12 of the Guidelines for Operation of ForeignInvestment Zones, a tenant company has to be a company invested solelyby foreigners, or a joint venture company in which the share of a foreigninvested company is at least 30% of the total number of voting stocks orthe total amount of contribution and the amount of foreign investmenttherein is at least KRW 100 million. A company whose foreign investmentmeeting the conditions listed above has been notified may sign the FIZtenancy contract.
- The minimum investment amount for moving into an FIZ should arrivewithin the execution period of five years from signing the tenancy contract.
Q115 | What is the status of complex-type foreign investment zones (FIZs)? What are the qualifications for tenancy and what benefits do tenant companies enjoy? |
A115 | There are 30 complex-type FIZs in Korea as follows (As ofAug. 2022): |
No. | Name | First designated on | Designated size (1,000㎡) | Management authority |
1 | Jangan 1 (Gyeonggi) | 2004-09-30 | 418.2 | FIZ center of Gyeonggi Housing & Urban Development Corporation |
2 | Dangdong (Gyeonggi) | 2005-09-12 | 239.4 | |
3 | Jangan 2 (Gyeonggi) | 2006-12-29 | 369.0 | |
4 | Oseong (Gyeonggi) | 2009-09-03 | 353.9 | |
5 | Ochang (Chungbuk) | 2002-11-06 | 495.3 | Chungbuk officeof Korea IndustrialComplex Corporation |
6 | Jincheon-Sansu(Chungbuk) | 2014-08-20 | 108.4 | |
7 | Chungju (Chungbuk) | 2016-07-18 | 334.7 | |
8 | Eumseong-Seongbon(Chungbuk) | 2021-07-08 | 165.3 | |
9 | Cheonan (Chungbuk) | 1994-10-13 | 492.5 | Chungcheong officeof Korea IndustrialComplex Corporation |
10 | Inju (Chungbuk) | 2004-12-21 | 164.8 | |
11 | Cheonan 5 (Chungbuk) | 2012-12-21 | 336.6 | |
12 | Asan-Tangjeong(Chungnam) | 2021-09-10 | 85.3 | |
13 | Songsan 2 (Chungnam) | 2015-10-12 | 134.0 | Dangjin office of KoreaIndustrial ComplexCorporation |
14 | Songsan 2-1(Chungnam) | 2017-01-31 | 165.3 | |
15 | Songsan 2-2(Chungnam) | 2019-03-20 | 117.9 | |
16 | Woljeon (Gwangju) | 2013-05-15 | 99.1 | Gwangju-Jeonnamoffice of Korea IndustrialComplex Corporation |
17 | Nat’l food cluster(Jeonbuk) | 2015-10-12 | 116.0 | Iksan office of KoreaIndustrial ComplexCorporation |
18 | Daebul (Jeonnam) | 1998-08-29 | 1,163.5 | Daebul office of KoreaIndustrial ComplexCorporation |
19 | Dalseong (Daegu) | 2008-09-10 | 104.2 | Dalseong office of KoreaIndustrial ComplexCorporation |
20 | Gumi (Gyeongbuk) | 2002-11-06 | 332.4 | Daegu-Gyeongbuk officeof Korea IndustrialComplex Corporation |
21 | Gumi parts(Gyeongbuk) | 2009-03-09 | 246.3 | |
22 | Sacheon (Gyeongnam) | 2001-08-17 | 495.9 | Sacheon office of KoreaIndustrial ComplexCorporation |
23 | Munmak (Gangwon) | 2013-12-10 | 84.1 | Gangwon office of KoreaIndustrial ComplexCorporation |
24 | Iksan parts (Jeonbuk) | 2010-03-12 | 169.8 | Iksan-si |
25 | Daejeon Int’l (Daejeon) | 2020-09-16 | 83.6 | Daejeonmetropolitan city |
26 | Pohang parts(Gyeongbuk) | 2009-09-03 | 264.9 | Pohang-si |
27 | Gwangyang Sepoong(Jeonnam) | 2017-11-02 | 82.6 | Gwangyang port areaFEZ authority |
28 | Jisa (Busan) | 2005-11-30 | 298.1 | Busan-Jinhae FEZauthority |
29 | Mieum parts (Busan) | 2011-11-28 | 299.6 | |
30 | Changwon parts(Gyeongnam) | 2010-10-14 | 71.3 |
- To qualify as a tenant of a complex-type FIZ, the company should beregistered as a foreign-invested company with a minimum foreigninvestment ratio of 30% and engage in the business categories (mainlythe manufacturing industry) set by the basic management plan. Therequirements for occupancy (minimum investment amount and factorybuilding area) have been recently relaxed. The tenant company shouldinvest an amount at least equal to the factory land price within five yearsfrom the date of signing the tenancy contract, and the construction of afactory that meets the minimum area ratio for the business type shouldbe completed within five years.
- Rent for tenant companies in a complex-type foreign investment zonecan be reduced or exempted pursuant to Article 19 of the EnforcementDecree of the Foreign Investment Promotion Act.
Reduction rate | Type of business | Conditions | Note | |
Investment | No. of full-timeworkers | |||
0% | Tenant companies | Normal rent (1% of acquisition price) | - | |
75% | Manufacturing | USD 5 mil. or more | - | - |
USD 2.5 mil. or more | 70~149 | - | ||
90% | Manufacturing | USD 2.5 mil. or more | 150~199 | - |
100% | Manufacturing | USD 5 mil. or more | - | Parts & materials complex |
Manufacturing | USD 2.5 mil. or more | 200 or more | - | |
New growth driver technology industry | USD 1 mil. or more | - | - |
Q116 | Is there a limit on sale or rent of site in a complex- type foreign investment zone (FIZ)? |
A116 | A complex-type FIZ restricts companies from renting afactory site that is bigger than necessary and encouragescompanies to secure the plot suitable for the size of thefactory building. It applies the standard factory area ratioand the minimum investment amount by sector to maximizethe efficiency of land usage. Foreign-invested companiesthat wish to move into a complex-type FIZ shall meet thefollowing two conditions: |
- FIZs limit the size of the leased site by the standard factory area ratiounder Article 15 of the Guidelines for Operation of Foreign InvestmentZones. The area of the site is calculated by applying the standard arearatio of a factory in the relevant business category. (In the case of acategory of business whose standard area ratio of a factory is not morethan 12%, the area ratio of 12% shall apply.)
- The limit on lease area for each company in a complex-type FIZ shall bedetermined by a master plan for management, taking into considerationthe characteristics of each complex within an area not exceeding thevalue corresponding to 100/100 of the amount of foreign investmentmade by the tenant company