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  • No. 303 Silhak Museum What are the guidelines for a group tour of The Museum of Silhak?

    – Though there is a parking lot in the museum area, you are advised to use the public parking lot about 50 meters away from the Remains of Dasan.
    – Large vehicles including buses are not allowed in the parking lot of the Museum.
    – To avoid congestion, you are advised to queue up.
    – No food is allowed in the exhibition rooms.
    – You must get a prior written permission before taking any pictures in the exhibition rooms.
    – Do not run or speak in a loud voice in the exhibition rooms.
    -Do not leave your group.
    – Pay attention to your guide’s instructions
    – Do not leave any garbage.
    – Rest rooms are located in the lobby on the first floor and in the exhibition room on the second floor. Please use the facilities considerately.

    ※ Guides will advise viewers of these guidelines in advance.

  • No. 302 Investment Attraction What is the package civil affairs?

    o The package complaint processing is a system where license/ permit complaints are classified into several complaint groups to speed up the process and, if some of major complaints are finished, the rest complaints are considered to have been processed together.

    o Kinds of complaints subject to the package processing

    In case of factory establishment-related license/ permit, when the approval of factory foundation is achieved 20 complaints including the farmland conversion permit are processed comprehensively.

    – If a small and medium sized company business plan is approved, 14 legal matters and 21 complaints are processed comprehensively.

    – When the building permit is made, 10 legal matters and 18 complaints including the land trait change permission are processed comprehensively.

    – In the environment related permits, when the permit on wastewater discharge facility is made, 6 legal matters and 7 complaints are processed comprehensively including the permit on air pollutant discharge facility.

    – In building-related license/ permit, when the permit on building use is achieved, 15 legal matters and 13 complaints are processed comprehensively including the permit on house electricity facilities.

    – When the permit on tourism complex construction plan is processed, 17 legal matters and 19 complaints are processed comprehensively.

    – When the permit on tourism business registration is achieved, 8 legal matters and 8 complaints are processed comprehensively.

    – When the permit on registered physical exercise facility business plan is processed, 9 legal matters and 9 complaints including the permit on the farmland conversion are processed comprehensively.

    – When the permit on the DB project in accordance with the regulations of Jeju International City Special Act is achieved, 25 legal matters and 27 complaints including the permit on grass composition are processed comprehensively.

    – When the factory registration is made in accordance with regulations of “Industrial Cluster Development and Factory Establishment Act, 25 legal matters and 27 complaints including the registration of publication business or reporting of printing company are processed comprehensively.

    o The package processing of complaints is being processed directly by IK on behalf of a foreign investor applicant made by discussion with related authorities.

  • No. 301 Investment Attraction What is the Cash Grant Program and what is the requirement for enjoyment of Cash Grant?

    Cash Grant Program intends to support the funds required for certain usages through negotiations with foreign investments in cash when the foreign investment is qualified with certain requirements to attract the foreign investment which is considered to contribute the national economy development. The foreign investment ratio should be more than 30% (incase of the foreign investment by contribution to a non-profit corporation, the ratio of contributed amount of foreign investor against the total contributed capital) and the facilities or businesses as followings should be installed or added: – the high-tech accompanying business and industrial support service business (more than $10 million, specified in the article 121-2(1)1 of Restriction of Special Taxation Act)

    – Parts and material business (more than $10 million, specified in the article 2(1) of Act on Special Measures for Promotion of Part/ Material Specialized Company, etc.)

     

    The range of parts/materials: Parts and materials separately set forth by the Minister of Knowledge & Economy in accordance with article 2 of Enforcement Decree of Act on Special Measures for Promotion of Part/ Material Specialized Company, etc.

    In case of new installation or addition of research facilities for performing R&D activities on the businesses in accordance with article 121-2(1)1 of Restriction of Special Taxation Act, the regular employment of dedicated researchers composed with either more than 3 years’ experiences in related areas with bachelor’s degrees or master degree holders in the related areas should be more than 10 persons (the requirement of more than $5 million investment deleted: enforced as of ’07. 10. 28)

    In other cases where the Foreign Investment Committee decided it is necessary (for example, the attraction of regional headquarters of multinational companies)

    – In case of establishing headquarters which supervise more than 2 countries as a foreign company which owns businesses in more than 3 countries.

    • In case of performing regional strategic industry in accordance with article 2(4) of Special Act on Balanced National Development, where the applicable industry is deemed to contribute to the development of the local economy.

     

    O Cash grants can be used for following purposes:

    – The purchase cost or rents of the land for the installation of factory or research facilities

    – The construction costs of factory or research facilities

    – The acquisition cost of capital goods or research equipment for business or research

    – Installation costs of infrastructure such as electric, communication facilities, etc. required for the construction of a factory or research facilities

    – Employment subsidies and training grants

  • No. 300 Investment Attraction What is the PM system and especially what is the role of PM?

    PM (Project Manager) system is one which aims at supporting investment works of foreign investor or foreign-invested company and such a PM may be designated by foreign investor or foreign-invested company.

     

    PM is the abbreviation of Project Manager for the investment advancement into Korea, who is an operator mediating between stakeholders and related agencies to implement related projects and providing solutions for problems, is an activity assistant providing materials requested by potential foreign investor and helping new or additional investment activities and performs following works.

    – Collection, provision of materials or information requested by foreign investor or foreign-invested company and arrangement of meetings

    – Suggestion of comments on foreign investment related support under article 9, 13, 14 and 14-2

    – Acting of work support and civil complaints related foreign investment under provisions of article 15 and 17

    – Matters related with life settlement support of foreign investor or officers and employees of foreign-invested company including housing lease, introduction of school entrance

    – Other works related to the foreign investment

  • No. 299 Investment Attraction What are the installation and the role of foreign investment promotion center and the foreign investment attraction committee?

    ■ The installation and the role of foreign investment promotion center

    It is installed in the central administrative agencies, special cities, metropolitan cities, provinces, city, Gun and GU to encourage smooth processing of civil complaints for permission, license, approval, designation, filing, recommendation and discussion related with the foreign investment and to support foreign investment effectively by constructing the cooperative system between related authorities.

     

    O Duties

    – Encouragement and inspection of civil complaints

    – Acting of preparation and submission of civil complaint documents related with the foreign investment

    – Publication, attraction and support of the foreign investment

    – Receipt, investigation and processing of civil complaints or suggestions of foreign investors or foreign-invested company

    – Exchange of information, liaison and administrative cooperation with agencies related with the foreign investment

    – Other various administrative supports related with the foreign investment

    ■ The installation and the role of the foreign investment attraction committee

    It is installed in special cities, metropolitan cities, provinces, city, Gun and special self-governing province in order to deliberate on the following matters:

    – Promotion, attraction and support plans for the foreign investment

    – Discussion of processing for complaints of foreign investor or foreign-invested company

    – Consultation on handling of civil affairs

    – Other matters which are recognized to be necessary for the foreign investment attraction by mayors of special cities, metropolitan cities or governors of provinces special self-governing province 

  • No. 298 Investment Attraction What is the business out of tax reduction object business on foreign investment, which is occupied in free trade zone?

    ■ Target Business

    – Manufacturing and logistics businesses which are run by the occupational companies stipulated in Act on Designation and Management of Free Trade Zones

    – logistics business stipulated in the Act on Designation and Management of Free Trade Zones for Cultivation of International Logistics Base”

    ■ Investment requirements and size

    – New plant facilities shall be installed and the foreign investment should be more than $ 10 million for manufacturing business and more than $ 5 million for logistics business.

    – Corporate (Income) tax reduction: Full reduction of corporate tax equivalent to the equity of foreign investment for 3 years from the date of first income generation year (if note income is not generated within 5 years, the fiscal year of the day when 5 years are applied and 50% for the subsequent 2 years

     

    <Previous occupied businesses in Masan and Iksan free trade zones>

    The existing free export zones are considered to be designated as free trade zones (article w of Addenda of Free Trade Area Establishment Act) and are applicable to tax reduction and rents compared with complex type foreign investment districts (article 8 of Addenda of the Act).

     

    – Accordingly, the foreign-invested company which moved into the free export zones gets the same tax reduction benefits.

  • No. 297 Investment Attraction What are the high-tech accompanying business and industrial support service business out of foreign investment businesses subject to tax reduction?

    ■ Significance of tax incentives

    The foreign investment business essential to strengthening the competitiveness of domestic industries may get tax reduction such as corporate tax, income tax, acquisition tax, registration tax, property tax, etc. in accordance with the Restriction of Special Taxation Act (article 9 of the Act).

     

    ■ The following businesses are deemed necessary in order to strengthen the international competitiveness of domestic industries and determined by the Minister of Strategy and Finance through the deliberation of the Foreign Investment Committee (Notification of the Ministry of Planning and Finance).

    o Industrial support service business

    – Businesses which have large effects on supporting development of other industries such as manufacturing support or with highly added values and considered to be necessary for enhancing the international competitiveness of the domestic industries

     

    • Technologies relative to Information processing and computer operation related
    • Technologies relative to development and production of Software (S/W)
    • Automatic management system technologies using computers
    • e-commerce related technologies, etc.

     

    o Other businesses which involve high technologies

    – It is a business which accompanies the technologies of which development levels are low or which are not developed and one which is deemed to be required to strengthen the international competitiveness of the domestic industries.

     

    • Manufacturing and design of computers (more than 64 bit)

    • Manufacturing of computer storage devices, input/output devices, other peripherals and their parts

    • Manufacturing of broadcasting, wireless communication devices and their core components
    • Manufacturing of semiconductor elements, materials, equipment, and their

  • No. 296 Investment Attraction Is the domestic branch or representative office of the foreign parent company is applied to the foreign investment under the Foreign Investment Promotion Act?

    – The advancement of a foreigner into the domestic business can be divided into 4 methods and they are the entrance by establishment of corporation or by a personal business, advancement through establishment of a branch or representative office in accordance with the Foreign Exchange Transaction Act, etc.

    – In case of establishment of a local subsidiary (more than 100 million won investment but more than 1 million won per investor if investors are more than 2 persons) or the investment for the business run as a personal business, only more than 100 million won investment is considered the FDI under the Foreign Investment Promotion Act.

    – The domestic branch of the overseas parent company is a branch of a foreign corporation, the income generated from domestic business is applied to the same corporate tax rate with domestic corporations and the representative office may perform the non-business activities or the head office. Because the installation of branch/ representative office (subsidiary) is applied to the Foreign Exchange Transaction Act, it is not applicable to the foreign investment under the Foreign Investment Promotion Act.

     

    Classification of the foreign-invested company and domestic branch

    Item

    Foreign direct investment company

    Branch of a foreign company

    Governing Law

    Foreign Investment Promotion Act

    Foreign Exchange Transaction Act

    Feature

    Domestic corporation

    Foreign corporation

    Coessential ness

    A foreign investor and an invested company are separate entities (separate accountings and account settlements)

    The head office and branch are the same entity (co accounting and account settlements)

    Reporting/ permitting institution

    KOTRA (domestic and foreign investment base trade center), the head office and branches of KEB

    Foreign exchange banks (filing)

    Financial Supervisory Service (Permission of financing business)

    Investment amount

    Minimum: 100 million per case

    Maximum: None

    No amount limitation

  • No. 295 Investment Attraction Is there any need of foreign investment implementation through M&A in addition to the establishment of foreign-invested company through foreign capital inflow of foreigners?

    • Socioeconomic aspects

    – It may minimize the social/ economic loss from the bankruptcy of companies with potential growth, withdraw and exit the declining companies (industries), and facilitate the advancement into growing companies.

    – Management efficiency improvement and entry costs reduction in restructuring the industry

    ▶ Minimization of the lead time of establishing new management bases required in securing new technologies, know-how, human resources development, and new markets

    – Reinforcement of market dominance and pursuit of economies of scale

    ▶ Expansion of company resource concentration and strengthening of market dominance by M&A

    ▶ Various expense reductions including raw material purchase expense, inventory management cost, fixed manufacturing cost, etc., and economies of scale attainable through M&A

    O business aspect

    Achievement of added value increase and increase of business synergy effects through expansion of company value chain

    – Securement of technological superiority through R&D cost savings and improvement of market advancement time

     

    o Financial aspects

    – Risk diversification effects through risk decrease or profit increase of companies expected

    – The increase of debt service ability and tax savings benefit expected

  • No. 294 Investment Attraction Which effects of the foreign direct investment are expected?

    o Securing stable foreign currency instrument

    – The foreign investment ensures the stable introduction of international capital without additional debt burden

    ▶ Since FDI aims at generating business profits from the long-term business through securement of the management rights, it is more stable than the pure nature of financing
    – In the situation where the domestic capital does not afford, M&A by the foreign investment plays a positive role in the restructuring of the domestic firms.

     

    o Economic effects of foreign investment

    – The overall inflow of capital itself creates added values through the increase of industry production and promotes the economic growth through economy-wide productivity improvement, technology transfer, increased employment, and expansion of exports.

    – Effect of increasing economic competitiveness

    ▶ It promotes competition within markets to improve effectiveness of domestic economy structure and increase consumer benefits through price decline.

    – Technology transfer and ripple effects

    ▶ The direct technology transfer into the subsidy in the nation by the foreign parent company or employment of researchers focusing on the foreign investment subsidy which received technology transfer spreads to other domestic companies through various channel.

    – Trade balance effect: Concurrent effect of the positive (+) and negative effects
    ▶ Local production by the direct investment brings in effects of import substitution, which improves the trade balance, but may worsen the trade balance by resulting in import increase from manufacturing factors such as raw materials/ parts one the other hand.

    ▶ Production base type foreign investment improves the trade balance whereas the market approach foreign investment aiming at the domestic sales may affect differently depending on the degree of finished goods substitution and the overseas procurement of intermediary goods.

    ▶ The capital inflow form the host country improves the capital balance nut the payment of royalty, transfer of gains deteriorates the invisible balance.

     

    – Employment effects

    ▶ The direct employment effect through local labor employment, the employment expansion of local companies for intermediary/ raw material supply by the foreign-invested company, distribution of finished goods by the foreign-invested company require the increase of employment.

    ▶ However, if the local companies which have used labor-intensive manufacturing methods are replaced by the capital-intensive foreign-invested company, the employment may be reduced.

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