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

o The direct investment by acquisition of exiting shares, etc. is classified into the subject of filing or permission.

o While the acquisition of existing shares is subject to prior filing, but permit of share acquisition for the defense industry company is subject to the permit. However, in case of acquiring existing shares of listed companies or Kosdaq in accordance with the Securities Exchange Act (excluding companies of which share acquisition is restricted due to the nature of for the public corporation in accordance with article 199(2) of the Act or by individual laws), filing should be 30 days after acquisition and major procedures are as followings: made within

• A foreigner files directly or by an agent (with a power of attorney) to a head office/ branch of a domestic bank or KI and KOTRA (including domestic trade center or overseas 36 base trade centers).

– Documents to be submitted

• A copy of foreign investment report by the method of existing shares, etc.
• A document which can confirm the related party relationship between assigns when assigns are plural.
• A certificate of a foreigner’s nationality

– The application receipt agency should issue a certificate of filing on confirming the descriptions, omissions, enclosed, etc.

O In order to acquire the existing shares of defense industry, the permit of the Ministry of Knowledge and Economy should be achieved and the procedures are as followings:

– A foreigner should make an application directly or by an agent with a power of attorney to the Investment Policy Team, Ministry of Knowledge and Economy (TEL: 02-2110-5359).

– Documents to be submitted
• The application of foreign investment permission by acquisition of existing shares, etc.
• A document which can evidence the status of related party between assigns in case of plural assigns
• A certificate of nationality

– The processing period shall be 15 days (15 day extension available if unavoidable) and the Minister of Knowledge & Economy should give a notice after deciding the permission by discussion with the competent minister, the Minister of National Defense.  

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

o The foreign investment by the long-term loan arise when a private foreign individual provides a loan for more than 5 years (based on the lending period specified at the time of initial loan agreement) to a foreign parent corporation, an applicable foreign investor or a company which has capital investment relationships with a foreign parent company.

o Applicant and a report receipt agency

– Applicant: Direct filing by a foreigner or filing by an agency

– The application receipt agency: Head office or branch of domestic banks, foreign banks’ branches of in Korea, KOTRA (Domestic trade center and 36 international stronghold trade center)

o Documents to be submitted

– An application of foreign investment by the long-term loan

– A copy of document which proves it is from a foreign parent CO or there are investment relationships with a parent company

– A copy of document which proves it is from a foreign investor or there are capital investment relationships with a foreign investor

– A copy of the loan agreement

– Certificate of nationality

o In the following cases, the filing of amendment should be made (amendment items prior to registration of foreign investment company

1) Foreign investment by acquisition of new shares and existing shares by foreign investor

– Change of trade name or title of a foreign investor

– Change of the foreign investment amount, foreign investment ratio, and investment method

– Change of the business to enjoy

– Change of assign such as shares, etc.

– Change of matters specified by the Ordinance of the Ministry of Knowledge & Economy as major items related with other filing information (change of address for foreign-invested enterprises)

2) Foreign investment to a non-profit corporation by contribution

– Change of trade name, title or nationality of a foreign investor

– Change of lender, loan amount and terms and conditions of loan

– Change of matters specified by the Ordinance of the Ministry of Knowledge & Economy as major items related with other filing information (change of address for foreign-invested enterprises)

3) Foreign investment to a non-profit corporation by contribution (enforced in ’07 .10.28)

– Change of trade name, title or nationality of a foreign investor

– Change of contribution amount and terms of such contribution (investment method/type

– Change of matters specified by the Ordinance of the Ministry of Knowledge & Economy as major items related with other filing information (change of address for foreign-invested enterprises)

O The amendment of registration for the foreign-invested company should be made in following cases:

• Where a foreign investor acquires stocks, etc. by transfer to capital from the reserve/ revaluation reserve, etc. of a foreign-invested company
  • Where a foreign investor acquires stocks, etc. of a newly incorporated corporation or a surviving corporation after a merger, the all inclusive stock swap or transfer, or a company division with the stocks he/she is holding at the time of the relevant foreign-invested company’s merger, all-inclusive stock swap or transfer with another company, or a company
  • Where a foreigner has acquired stocks, etc. of a foreign-capital invested company registered in accordance with the provisions of Article 21 by means of purchase, inheritance, testamentary gift, or gift from a foreign investor;
  • Where a foreign investor has acquired stocks, etc. by means of investing the proceeds from the stocks, etc. which were acquired under the laws of Korea; and
  • Where a foreigner has acquired stocks, etc. using convertible bonds, exchangeable bonds, stock depositary receipts, and such other similar ones as may be converted into, available for the acceptance of, or exchanged for stocks, etc.

O Application of registration amendment
– Submission to a follow up agency within 30 days from the date of reason occurrence (an agency which receives a foreign investment application or gives a notice of permit)
– Documents: Application of foreign investment registration (amendment registration), a document which proves the reasons, a certificate of foreign investment business license (original)

Licenses and permits processed directly by IK are 3 legal issues and 11 complaints and are as followings:

– A staff dispatched by Customs Service confirms the completion in kind related with capital goods importation immediately.

– 9 civil complaints including a foreigner’s residence eligibility, admission of reentry and the foreigner registration are immediately processed by a dispatched officer of the Ministry of Justice.

– The registration certificate regarding the business license is issued within 7 days by a dispatched officer of the Customs Service.

– It means the civil complaint such as license and permit related with the foreign investment are imposed of 7~90 days of processing time depending on he nature and to consider the license and permit is automatically made in case of lapse of such processing periods.

– In case of automatic license/ permit, the issuance of certificate for such license/ permit is compulsory and the refusal of license/ permit should advise the specific reasons of objection. 

The hinterland of harbors is designated as an FTZ and both Korean and foreign-invested companies are eligible to enter the FTZ. However, there are mainly three broad differences concerning the benefits provided to the companies as stipulated in amendments of the Act on Free Trade Zones:

• First of all, if not all the applications can be accepted, the foreign-invested companies will be given priority.
• Secondly, Korean companies and foreign-invested companies will be offered very low rentals within the FTZ. However, the amendment of the Act on Free Trade Zones stipulates that foreign-invested companies fulfilling certain conditions will be provided with additional reductions to the already low rentals.
• Thirdly, Korean companies and foreign-invested companies enjoy an exemption from indirect taxes such as custom duty and value-added tax. However, incentives for direct taxes such as corporate tax will be given only to foreign-invested companies investing more than US$5 million (for logistics sector), which is a 100% reduction for three years and 40% reduction for the following two years.

The hinterland of harbors which are designated as FTZs are close to piers for international freight ships. Therefore, it is more preferable and convenient for international logistics companies linked to the harbors, or else companies producing and assembling products to be re-exported, to move into the FTZ.
Accordingly, the focus is more on international logistics companies in the case of the 40,000 pyung hinterland of the Busan harbor and the Busan new harbor area. The Busan harbor hinterland has a well-developed service industry related to harbors and is close to the piers, and the Busan new harbor hinterland has an already well-developed industrial complex. Attracting manufacturing companies is limited to an extent, as they do not pose a problem to the harbor and its role of a logistics hub.
The hinterland of the Gwangyang harbor is a large international harbor, but nearby industrial complexes are not yet sufficiently developed. Gwangyang harbor plans to also attract manufacturing companies for export and expand the area into a compound production and logistics hub.

A Free Trade Zone (hereafter FTZ) is a zone for free manufacturing, logistics and distribution receiving benefits and incentives pursuant to relevant laws such as the Customs Act, and Foreign Trade Act. An FTZ is an area as defined in the Act on the Designation of Free Trade Zones. It is a new version of integrating the existing “Free Trade Zone”, which was focused on the manufacturing sector and the “Customs Free Zone”, focused on logistics.
The FTZs enjoy free customs clearance and exemption from customs and taxes. Furthermore, the carrying in and out of freight as well as simple manufacturing processes can be freely undertaken.
The foreign-invested companies in the FTZ, which are in the high-technology, industry-supporting sector, manufacturing companies with an investment of more than U$10 million, as well as companies in logistics with foreign investment of more than U$5 million, enjoy extensive tax benefits, cheap leases and other incentives when moving into the area.
The FTZs eligible for the benefits are the ones in Masan, Gunsan, Iksan, Daebul, Busan harbor, Gwangyang harbor, and parts of the Incheon harbor.