TITLE : FAQ on FDI in Korea 2023 (Q121~Q125)
페이지 정보
본문
■ FAQ on FDI in Korea 2023 (Q121~Q125)
Factory Establishment and Location
A company does not need to have ownership over the landwhen applying for factory establishment approval. Onlythe right to use the land is necessary. Once it is confirmeda factory can be built on the site after examining therequirements for moving into the site, the company canapply for factory establishment approval after obtainingthe land owner's permission to use it even before the landownership is transferred.
In the case of factory establishment approval under Article13 of the Industrial Cluster Development and FactoryEstablishment Act, the construction permit is deemedto be obtained through the legal fiction of authorizationor permission. (The legal fiction of authorization orpermission is the system that collectively handles separateauthorization and permit processes under different lawsto improve administrative work efficiency and services forthe public.) By doing so, the company can apply for factoryestablishment permit and construction permit for factorybuilding concurrently, hence shortening the factory'sconstruction period.
- According to Article 17 (1) of the Foreign Investment Promotion Act,associated licensing and permit requests for factory establishmentapproval shall be deemed to have been granted through the legal fictionof authorization or permission, which effectively shortens the time takenfor the administrative work
The Seoul Metropolitan Area Readjustment Planning Actregulates the total number of factories established in theSeoul Metropolitan area, while the attached Tables of theEnforcement Decree of the Industrial Cluster Developmentand Factory Establishment Act define rules on theestablishment, expansion, or relocation of factories in threezones: overconcentration control zone, growth managementzone, and nature preservation zone.
※ Note: Restrictions on factory locations in the Seoul Metropolitan Area
- The Seoul Metropolitan Area refers to Seoul Special Metropolitan City,Incheon Metropolitan City, and Gyeonggi-do (Article 2 of the SeoulMetropolitan Area Readjustment and Planning Act).
- For the appropriate dispersion of population and industries within theSeoul Metropolitan area, the Seoul Metropolitan area shall be dividedinto overconcentration control zone, growth management zone, andnature preservation zone (Article 6 of the Seoul Metropolitan AreaReadjustment and Planning Act).
Zone | Designation | Restricted Activities |
Overconcentrationcontrol zone | The area in which populationand industries are, or are likelyto be, excessively concentratedin such a way, that transfer outof which, or readjustment ofwhich, is deemed necessary | • Designation of an industrial area • Designation of industrial areaswithin such an extent that doesnot increase the total area of theexisting industrial areas is permittedafter obtaining approval of the SeoulMetropolitan Area ReadjustmentCommittee |
Growthmanagementzone | The area into which the populationand industries transferring out ofthe overconcentration control zoneshall be intentionally solicited, andfor which proper management ofthe accommodation of industriesand of urban development isrequired | • To designate an industrial area,the matters prescribed by Seoulmetropolitan area readjustmentplan should be complied with. |
Naturepreservationzone | The area in which preservationof the natural environment, suchas the water of the Han Riversystem and green belt areas, isrequired | • Businesses for the purpose ofcreation of housing sites, industrialsites, tourist sites that meet the typesand minimum area prescribed byPresidential Decree |
※ Relaxation of the restrictions: Articles 26, 27, 27-2, 27-3, and attached Tables 1, 2,3 of the Enforcement Decree of the Industrial Cluster Development and FactoryEstablishment Act
A tenant company that wishes to sell its factory afterconstruction should submit to the management agencydocuments prescribed by the Ordinance of the Minister ofTrade, Industry, and Energy under Article 39 (3) of the IndustrialCluster Development and Factory Establishment Act.
- If a company intends to sell the industrial land acquired under Article 39 (2)of the Industrial Cluster Development and Factory Establishment Act orunder Article 50 of Enforcement Decree of the same Act within five yearsfrom reporting the completion of the factory construction, the companyshould declare the ownership transfer to the management agency.
- In this case, the industrial complex's transfer price is the acquisitionprice multiplied by the producer price index from the date of acquisitionto the transfer date plus the industrial complex's maintenance costs. Thetransfer value of the factory may be based on the market value appraisal.
Under Article 40 of the Industrial Cluster Development andFactory Establishment Act, any person who has acquired anindustrial site or a factory from a tenant company or supportagency by auction or other associated laws should sign atenancy contract within a year from the date of acquisition.Otherwise, the asset has to be transferred to a third partywithin the following year