• Remittance is guaranteed for dividends and capital from the sale of shares and equity owned by the foreign investor depending on the contents of the permission or report at the time of the said remittance.

• Foreign investors and foreign companies shall be treated equally in terms of business activities except for certain cases stipulated otherwise by law.
  
  ? Foreign investors may enjoy more favorable treatment in terms of tax reductions and company or factory site locations.

• If the import of capital goods is notified at and confirmed by the Bank of Korea or any of KOTRA's offices, it will be recognized as import approval pursuant to the Foreign Trade Law.

• For FDI in kind, foreign investors need to apply for confirmation on completion of FDI in kind after customs clearance by the Korea Customs Service. This confirmation shall be regarded as a written report of investigation by the investigator pursuant to Art. 203 of the Non-Contentious Case Litigation Procedure to facilitate the administrative process.

♦Lease of national and local government properties

♦ Exemption from Customs Duty

• 1. Capital goods received from foreign investors that are used as a means for domestic or foreign payment.
• Capital goods that are imported by the foreign investor as a means of investment.

• Cash (direct import of the foreign currency or transmission of foreign currency through a foreign exchange bank and converted into national currency);
  
  
• Capital goods (including used capital goods) and raw material needed for the initial test operation;
  
  
• Income generated from stocks or equity acquired in line with the regulations stipulated in FIPA (dividends);
  
• Industrial property rights, intellectual property rights and other equivalent rights dealing with technology and its use;
  
  
• Remaining assets generated from the liquidation of the domestic branch or liaison office of the foreign investor;
  
  
• Repayment of long-term loans with maturity of five years or longer, pursuant to FIPA, to foreign-invested companies by their overseas parent companies and to companies affiliated with the overseas parent companies concerned;
  
  
• Stocks or equity of a company acquired pursuant to FIPA and the Foreign Exchange Transactions Act or capital gained from the disposition of real estate;
  
  
• Stocks of foreign companies listed on a foreign stock exchange market and stocks owned by foreign nationals pursuant to the Foreign Exchange Transactions Act or FIPA;
  
  
• Real estate in Korea owned by foreign nationals

• The designation is conducted by the governors of the metropolitan cities or the provincial areas for foreign investors with at least a specified amount of investment and selecting the FIZ of preference.

♦ Conditions for designation

♦ Benefits of Foreign Investment Zones

    1. National tax and local tax reductions only refer to the relevant amount of the foreign
        investor's shares
    2. The numbers in parentheses are applicable from 2005

♦ Continuous source of foreign currency

  - Securing a steady influx of foreign capital without the burden of additional foreign debt; FDI
    is targeted on long-term profits and is therefore more secure than other purely financial
    investments.
  - Positive effects on the restructuring of domestic companies through M&A by foreign-
    invested companies if domestic capital is insufficient.

♦ Economic benefits

  - The imported foreign capital itself will contribute to a higher production rate of the industry,
    increasing the value-added and therefore improving the productivity of the overall economy
    as well as promoting economic growth through technology transfer, higher employment,
    and increased exports.
  - Synergy effects
      · Promoting economies of scale, versification of products, improving efficiency through
        the network of headquarters and branch offices of the multinational companies, as well
        as improving the flexibility of the management structure.
  - Increasing competitiveness
      · Increasing the competitiveness within the market and thus improving the efficiency of
        the domestic economic structure. Increasing the welfare of consumers through price
        decreases.
  - Technology transfer and propagation
      · Technology propagation to other domestic companies, such as employing research
        staff mainly from foreign-invested companies and their affiliates having received tech-
        nology transfer or from companies that have received technology directly from their
        headquarters.
  - Pros and cons regarding the balance of payments
      · On the one hand, better balance of payments are achieved by replacing imports
        through domestic production; however, more imports of raw
        materials and parts from the headquarters will lead to worsening of the balance of
        payments.
      · Production-based foreign investment will improve the balance of payments positions, but
        the effects of a market-approach based foreign investment with the objective of
        domestic sales will depend on how well the finished products can replace imports and
        on the supply status of capital goods from overseas.
      · Capital inflow from the branch will improve the balance of payments; however, payment
        of royalties, and transfer of profits will lead to worsening of the balance of payments.
  - Creating employment
      · Higher employment through the need for more workforce directly in the branch office
        and in the headquarters to meet the increased supply needs for capital goods and raw
        materials. Also, the need for more staff in affiliated companies due to the distribution
        and delivery of the finished product.
      · However, there is also a possibility of less employment, if labor-intensive production
        methods are replaced by capital-intensive methods.

♦ In principle, there are generally four ways a foreign national can enter the Korean market.
    They are: establishment of a company or individual investment, which are both based on
    FIPA; or establishment of a branch or liaison office, which are based on the Foreign
    Exchange Transactions Act.

      - The establishment of a company (minimum KRW100 mil.; for two investors, min. KRW100
        mil. investment each) and individual investment of at least KRW100 mil. will be regarded
        as foreign investment in accordance with FIPA.
      - A branch of a foreign headquarters has to pay the same corporate tax rate as domestic
        companies for their profits made in Korea, and a liaison office can only conduct non-
        profit-making business activities for its headquarters and thus is not considered foreign
        investment.

• Manufacturing and designing computers (above 64Bits);
• Manufacturing of computer memories, input-output devices, other appliances and parts;
• Manufacturing of broadcast and wireless communication devices and their core parts;
• Manufacturing of semiconductor devices, material and equipment and their parts.

• Information processing and computer management technology
• Software development and production technology
• Automated management system technology-using computers
• E-commerce-related technology

♦ Establishment and function of the foreign investment promotion center:

    - In order to efficiently support foreign investors, the foreign investment promotion center shall       be established in the central administrative bodies, major metropolitan areas as well as
      'shi' (cities), 'gun' (counties), and 'gu' (districts). The center shall set up a cooperative
      system with relevant agencies and allow the smooth flow of administrative duties including
      approvals, licenses, permissions, certificates, notifications, recommendations, consulta-
      tions, etc.

    - Duties include the following:

• Checking and supporting administrative processes;
• Filling out and submitting documents related to foreign investment;
• Promoting, attracting and supporting foreign investment;
• Accepting, investigating and processing grievances of foreign investors or foreign-invested companies;
• Exchanging information and cooperating with relevant institutions;
• Other administrative support services.

• Planning with regard to attracting, promoting and supporting foreign investment;
• Consulting the grievance solution process of foreign investors or foreign-invested companies;
• Consulting administrative duties;
• Other measures that the governors of the metropolitan cities or provinces find necessary to promote foreign investment.

♦ Yes, it is considered to be foreign investment.

  - If the total amount of the shares is more than KRW100 mil., and more than 10% of the total
    shares are acquired, then it is subject to FIPA. In this case, the foreign company has to
    notify foreign investment through the acquisition of existing shares pursuant to Art.6 of FIPA.

• Gathering and providing information and documents and well as setting up meetings;
• Providing suggestions pursuant to Art. 9, 13, 14 and 14-2 of FIPA;
• Administrative support pursuant to Art. 15 and 17 of FIPA;
• Supporting the settlement of the foreign investors or executives and employees of the foreign-invested companies and their families in Korea (providing information about schooling and housing).

• Industrial-supporting services and high-technology business (more than US$10 mil. pursuant to Art.121 of the Special Tax Treatment Control Act);
• Parts and material business (more than US$10 mil.);
  · Included are the items which are selected by the Minister of MOCIE from the parts and material list;
• R&D facilities of industry-supporting service and high-technology businesses with foreign investment of more than US$5 mil. and more than 20 permanent employees who possess at least a Master's degree and more than three years research experience.

• Purchase or rental of land needed for the establishment of factory or research facilities;
• Construction costs for factories or research facilities;
• Costs for the purchase of capital goods and research material to be used for business or research activities in factories or research facilities;
• Costs for the establishment of basic infrastructure (electricity and communication facilities) needed for new factories or research facilities;
• Financial assistance for employment and educational training.