Requirements for designation
• Requirements for new designation: The occupancy demand should cover at least 60 percent of the complex area and measure at least 80,000 m2.
- Seoul metropolitan area: When the occupancy rate of an existing foreign investment zone in the same municipality is below 80 percent, new or modified designation will be restricted.
- Outside the Seoul metropolitan area: A foreign-invested company’s occupancy demand for which foreign investment notification was completed should be at least 30 percent of the complex area and the explicit occupancy demand should be 50 percent or more of the complex area.
• Requirements for expansion of existing zones: The occupancy demand should cover at least 80 percent of the existing designated area, and the occupancy demand for which foreign investment notification was completed should cover at least 60 percent of the entire complex area
Occupancy requirements
• Eligibility: A joint venture company where a foreign-invested company or a company in which a foreigner is the sole investor holds 30 percent or more [10% or more in a standard factory in the Daebul Industrial Complex, and 50% or higher for businesses prescribed by Article 25 (1) 3 (a) (complex logistics terminal business) and 25 (1) 3 (b) (joint collection and delivery complex)] of the joint venture’s total number of stocks with voting rights or total capital. The foreign investment amount should be KRW 100 million or more.
• Minimum investment amount: Investment equal to or more than the price of the factory site (the higher between the acquisition price and the officially assessed land price) should be attracted within five years.
• Factory building area: The minimum building to land ratio required by industry shall apply (minimum of 12 percent), and factory construction should be completed within five years
Site rent
A site can be leased for up to 50 years after the signing of an occupancy contract (to be renewed every 10 years).
Rent reduction rate (compared to normal rent) Normal rent Market rent
100% 90% 75% 1% 5%
Businesses accompanying new growth driver industry technology*** investing USD 1 million or more (After a 100%
exemption for 10 years, the rent reduction rate shall be decided based on investment amount and scale of employment.) inve sting USD 2.5 million
※ Manufacturing businesses investing USD 5 million or more: 100% exempted for industrial complexes exclusively for parts and materials businesses; 50% reduced for other industrial complexes
※※ To receive a rent reduction or exemption, a tenant company in a foreign investment zone should file an application to the foreign investment zone management authority and submit the relevant documents of proof. Rent reduction or exemption shall apply starting from the month in which the tax reduction or exemption decision was finalized. Tenant companies should pay the pre-reduction/ exemption rent until plant construction is completed
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Rental deposit
A deposit equal to one year’s worth of market rent at the time of entering into the occupancy contract should be deposited. The rental deposit may be replaced with a surety insurance certificate or bank payment guarantee on a tenant company’s request.
Execution of business plan
• The occupancy requirements (minimum FDI amount, minimum building to land ratio) should be fulfilled within five years of signing the occupancy contract. The eligibility and requirements for occupancy (foreign investment ratio of 30 percent or more, foreign investment amount of KRW 100 million or more) should be maintained after the business plan execution period.
• In the event that the eligibility criteria for occupancy are not met, the market rental rate shall be imposed. When there are inevitable causes, a grace period of two years may be granted for meeting the eligibility criteria after a negotiation with the Ministry of Trade, Industry & Energy. In this case, the market rent rate shall be applied retroactively from the date of occurrence of the cause of failing to satisfy the requirement.
• In the event that the committed foreign investment amount is not fully invested, the market rental rate shall be applied retroactively from the day on which the business fails to satisfy the minimum required foreign investment amount. If inevitable, however, the business may be granted a grace period of up to one year from the date on which the business plan execution period expires after negotiations with the Minister of Trade, Industry & Energy. The market rental rate shall be applied to the excess area retroactively from the date of occurrence of the cause.
• In the event that part or all of the foreign investment amount is executed with long-term loans, the market rental rate shall apply when the foreign investment amount fails to satisfy the minimum required amount for occupancy due to repayment of the loans.
• In the event that the minimum required factory floor area is not satisfied, the market rent rate shall be applied to the excess area retroactively from the day on which the business fails to satisfy the minimum required factory floor area. If inevitable, however, the business may be granted a grace period of up to one year from the expiry of the performance period pursuant to consultation with the Minister of Industry, Trade & Energy. The market rent rate shall be applied to the excess area retroactively from the date of occurrence of the cause of failing to satisfy the requirement.
• In the event that the industrial site is returned within five years of the contract signing date without fully executing the business plan, the market rent for the period from the contract signing date to the contract termination date should be paid for the portion of the unexecuted business plan, and the reduced rent should be returned as well.
• Any purchased industrial site shall not be disposed of within five years of the date of signing the purchase contract. An amount equal to the funds supported by the state or municipal government shall be returned if the land is sold within 10 years.
• The construction of a factory building should commence within one years of signing the occupancy contract [Article 42 (1) 1 of the Industrial Cluster Development and Factory Establishment Act] and shall be completed within five years.
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Occupancy system for suppliers
• Foreign-invested companies that have signed an occupancy contract may request that their suppliers (domestic company with no foreign-held shares) be permitted to occupy 30 percent or less of the factory’s gross floor area for the purpose of process shortening or cost reduction.
• Permission will be granted after the evaluation of a review committee and the consent of the Minister of Trade, Industry & Energy. Suppliers’ occupancy contract should be renewed every five years.
• The rental rate shall be the market rental rate (5 percent).
<Complex-Type Foreign Investment Zones (As of Dec. 31, 2018)>
No. Foreign
(Chungnam) Oct. 13, 1994 491.38 491.38 - 42 310
2 Daebul
(Jeonnam) Aug. 29. 1998 1,170.58 1,121.08 49.50 30 69
3 Sacheon
(Gyeongnam) Aug. 17. 2001 495.19 495.19 - 16 224
4 Gumi
(Gyeongbuk) Nov. 6, 2002 332.36 207.92 124.44 11 165
5 Ochang
(Chungbuk) Nov. 6, 2002 446.26 446.26 - 11 223
6 Jangan 1
(Gyeonggi) Sep. 30, 2004 418.16 282.21 135.95 14 258
7 Inju
(Chungnam) Dec. 21, 2004 159.46 159.46 - 7 161
8 Dangdong
(Gyeonggi) Sep. 12, 2005 239.46 239.46 - 6 383
9 Jisa (Busan) Nov. 30, 2005 297.07 239.53 57.54 10 438
10 Jangan 2
(Gyeonggi) Dec. 29, 2006 368.98 227.63 141.34 7 303
11 Dalseong
(Daegu) Sep. 10, 2008 104.19 104.19 - 6 218
12 Gumi Parts
(Gyeongbuk) Mar. 9, 2009 246.34 174.89 71.45 7 151
13 Oseong
(Gyeonggi) Sep. 3, 2009 353.93 169.10 184.83 7 323
14 Pohang (Parts) Sep. 3, 2009 264.93 221.16 43.78 4 127
15 Iksan (Parts) Mar. 12, 2010 319.40 124.94 194.46 3 103
16 Changwon Nammun
(Parts) Oct. 14, 2010 71.27 40.48 30.79 3 451
17 Mieum (Parts) Nov. 28, 2011 299.58 164.28 135.31 6 425
18 Cheonan 5
(Chungnam) Dec. 21, 2012 336.60 309.29 27.31 15 207
19 Woljeon
(Gwangju) May 15, 2013 99.06 99.06 - 5 190 (no.1)/250 (no.2)
20 Munmak
(Gangwon) Dec. 10, 2013 95.83 45.39 50.44 3 249
21 Jincheon Sansu
(Chungbuk) Aug. 20, 2014 108.40 108.40 - 3 144
22 Songsan 2
(Chungnam) Oct. 12, 2015 134.02 99.95 34.07 2 290
23
Nat’l food industry complex (Jeonbuk)
Oct. 12, 2015 116.00 23.13 92.87 1 126
24 Chungju
(Chungbuk) Jul. 18, 2016 334.70 219.84 114.85 2 160
25 Songsan 2-1
(Chungnam) Dec. 20, 2016 165.31 91.35 73.96 2 290
26 Gwangyang Sepoong
(Jeonnam) Nov. 2, 2017 82.64 82.63 0.01 1 248
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(2) Individual-Type Foreign Investment Zones – Requirements and Designation Status
• Designation procedure: Individual-type foreign investment zones are locations tailored to large-scale investors designated by the Foreign Investment Working Committee of the Ministry of Trade, Industry
& Energy. Based on the designation plan submitted by the mayor or governor or the relevant city or province, the Committee deliberates on factors such as investment feasibility, regional development effects, employment effects, and government financing effects.
• Designation criteria: The foreign investment amount prescribed by Article 25 (1) of the Enforcement Decree of the Foreign Investment Promotion Act refers to the amount of foreign investment in Article 2 (1) 4 of the Act. However, in individual-type zones, the amount of foreign investment that was executed before application for designation shall be excluded.
Industries Designation requirement
Manufacturing businesses, businesses accompanying new growth driver industry technology
FDI of USD 30 million or more
Tourism FDI of USD 20 million or more (e.g., tourist hotel business, universal amusement facility business)
Logistics, SOC FDI of USD 10 million or more (e.g., integrated logistics terminal business)
R&D facilities
R&D facilities for businesses accompanying new growth driver industry technology investing FDI of 2 million or more
- Employing at least 10 researchers holding a master's degree or higher having research experience of three years or longer)
<Individual-Type Foreign Investment Zones (As of Dec. 31, 2018)>
No. Name of business Location Area (1,000m2)
Initial designation
date
No. Name of business Location Area (1,000m2)
Initial designation
date 1 Korea TAIYO YUDEN Co.,
Ltd
Sacheon,
Gyeongnam 171.65 Oct. 22,
1999 43 Taegu Tec Daegu 57.81 Aug. 1,
2011 2 J.S.T. Korea Co. Ltd. Yangsan,
Gyeongnam 20.25 Mar. 14,
2000 44 SSLM Daegu 110.40 Aug. 1,
2011 3 Korea Autoglass Sejong 190.47 Dec. 30,
2000 45 UMICORE KOREA Ltd. Cheonan,
Chungnam 31.71 Dec. 20, 2011 4 BASF Korea_Jeonnam Yeosu,
Jeonnam 591.67 Dec. 30,
2000 46 TONGSUH PETROCHEMICAL
CORP., LTD. Ulsan 28.68 Dec. 22,
2011 5 BASF Korea_Jeonbuk Gunsan,
Jeonbuk 6.50 Jan. 12,
2001 47 Air Products Korea_Asan Asan,
Chungnam 7.71 Mar. 12, 2012
6 DB Hitek Eumseong,
Chungbuk 137.22 Jun. 29,
2001 48 Goulds Pump Cheongju,
Chungbuk 46.99 Sep. 21, 2012 7 Dongwoo Fine-chem Pyeongtaek,
Gyeonggi 252.33 Dec. 29,
2003 49 Dongwoo Fine-chem_Iksan Iksan, Jeonbuk 38.67 Sep. 28, 2012 8 Asahi Glass Fine Techno
Korea
Gumi,
Gyeongbuk 341.12 Dec. 21,
2004 50 ASE Korea Paju, Gyeonggi 27.43 Sep. 28, 2012 9 Korea MCC Logistics Busan 67.86 Dec. 23,
2004 51 Samsung Corning Advanced Glass Ltd.
Asan,
Chungnam 143.03 Oct. 2, 2012 10 Toray Advanced Materials
Korea_Factory 3
Gumi,
Gyeongbuk 191.38 Dec. 27,
2004 52 Advantest Korea Cheonan,
Chungnam 39.61 Oct. 2, 2012 11 Avan Strate Korea Pyeongtaek,
Gyeonggi 88.77 Dec. 30,
2004 53 Hyundai and Shell Base Oil Seosan,
Chungnam 19.00 Oct. 2, 2012 12 Korea Hoya Electronics Pyeongtaek,
Gyeonggi 18.64 Dec. 30,
2004 54 Nisso Namhae Agro Yeosu,
Jeonnam 8.03 Oct. 5, 2012 13 Lintec Korea Cheongju,
Chungbuk 49.60 Dec. 31,
2004 55 Ulsan Aromatics Ulsan 168.39 Oct. 11, 2012
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71
No. Name of business Location Area (1,000m2)
Initial designation
date
No. Name of business Location Area (1,000m2)
Initial designation
date 14 AGC Display Glass Ochang Cheongju,
Chungbuk 164.77 May 27,
2005 56 Baektongshinwon Seogwipo, Jeju 348.90 Oct. 8, 2013 15 Linde Korea Yongin,
Gyeonggi 24.37 Nov. 28,
2005 57 Lotte Versalis Elastomers Co., Ltd.
Yeosu,
Jeonnam 140.43 Dec. 12, 2013 16 Praxair Korea_Gyeonggi Yongin,
Gyeonggi 48.61 Nov. 28,
2005 58 Toray Advanced Materials Korea_Gunsan
Gunsan,
Jeonbuk 214.95 Dec. 13, 2013 17 USG Boral Korea Dangjin,
Chungnam 17.82 Dec. 26,
2006 59 Air Products Korea_
Hwaseong
Hwaseong,
Gyeonggi 5.89 Dec. 20, 2013 18 Asahi PD Glass Co. Ltd. Gumi,
Gyeongbuk 63.89 Dec. 28,
2006 60 Korea Nitto Optical Pyeongtaek,
Gyeonggi 13.19 Dec. 24, 2013 19 Versum Materials Korea
Inc. Ulsan 30.61 Dec. 28,
2006 61 Legoland Korea Chuncheon,
Gangwon 281.07 Apr. 29, 2014 20 Lotte MCC_Chungnam Seosan,
Chungnam 66.62 Apr. 30,
2007 62 Initz Ulsan 22.15 Jun. 26,
2014 21 Stanford Hotel Korea Seoul 3.43 May 17,
2007 63 NRG Corporation Yesan,
Chungnam 24.29 Jun. 30, 2014 22 Ilsang Ocean
Development
Yeosu,
Jeonnam 116.36 Nov. 20,
2007 64 SK Advanced Ulsan 104.42 Nov. 13,
2014 23 3M Korea High-tech Naju,
Jeonnam 5.53 Dec. 27,
2007 65 Toray Advanced Materials-4th Factory
Gumi,
Gyeongbuk 269.66 Dec. 1, 2014 24 Toray Battery Separator
Film
Gumi,
Gyeongbuk 228.74 Mar. 31,
2008 66 Sumitomo Seika Polymers Korea
Yeosu,
Jeonnam 41.03 Apr. 9, 2015 25 Plaxair Korea Asan,
Chungnam 15.83 Jul. 28,
2008 67 Tyco AMP Gyeongsan,
Gyeongbuk 81.27 Nov. 30, 2015 26 Power Carbon Technology Gumi,
Gyeongbuk 74.50 Dec. 18,
2008 68 ASM Korea Hwaseong,
Gyeonggi 7.20 Dec. 3, 2015 27 Danone Korea Muju,
Jeonbuk 119.94 Feb. 27,
2009 69 Landing Jeju Development
Co., Ltd. Seogwipo, Jeju 1,158.19 Dec. 4, 2015 28 Eastman Fiber Korea Ulsan 37.69 Sep. 3,
2009 70 Air Products Korea_
Pyeongtaek
Pyeongtaek,
Gyeonggi 34.17 Dec. 21, 2015 29 Seohan-NTN Bearing Co.,
Ltd.
Gyeongju,
Gyeongbuk 86.57 May 10,
2010 71 Greenland Jeju Healthcare Seogwipo, Jeju 224.74 Dec. 30, 2015 30 Edwards Korea Cheonan,
Chungnam 40.01 Sep. 30,
2010 72 Umicore Materials Korea Ⅱ Cheonan,
Chungnam 83.19 Jul. 20, 2016 31 Rohm and Haas Electronic
Materials Korea Ltd.
Cheonan,
Chungnam 50.07 Sep. 30,
2010 73 Kuraray Korea Ulsan 6.50 Jul. 21,
2016 32 ON Semiconductor Korea Bucheon,
Gyeonggi 6.58 Dec. 29,
2010 74 Stanford Hotel & Resort_
Tongyeong
Tongyeong,
Gyeongnam 16.85 Jul. 21, 2016 33 Oilhub Korea Yeosu Yeosu,
Jeonnam 349.79 Dec. 30,
2010 75 KOLON BASF InnoPOM Gimcheon,
Gyeongbuk 27.32 Jul. 25, 2016 34 Cargill Agri Purina, Inc. Dangjin,
Chungnam 58.62 Dec. 30,
2010 76 Air Products Korea_Ulsan Ulsan 6.50 Dec. 22, 2016 35 Cargill Processed Fat Dangjin,
Chungnam 52.99 Dec. 30,
2010 77 WACKER CHEMICALS
KOREA INC. Ulsan 6.94 Nov. 2,
2017 36 Hyundai Cosmo Seosan,
Chungnam 177.44 Dec. 30,
2010 78 Toray BSF Coating Korea Ltd.
Cheongju,
Chungbuk 13.00 Jan. 26, 2018 37 DOW CHEMICAL OLED
LTD.
Cheonan,
Chungnam 39.52 May 20,
2011 79 MEMC KOREA COMPANY Cheonan,
Chungnam 9.55 Jul. 2, 2018 38 LOTTE MCC_Yeosu Yeosu,
Jeonnam 70.62 May 20,
2011 80 Air Liquide Korea Yeosu,
Jeonnam 15.24 Nov. 12, 2018 39 AVANCIS KOREA Co., Ltd. Cheongju,
Chungbuk 145.31 May 20,
2011 81 Aqua World Busan 38.92 Dec. 14,
2018
40 Molex Korea Ansan,
Gyeonggi 13.93 May 26,
2011 82 MATHESON GAS PRODUCTS KOREA
Asan,
Chungnam 10.70 Dec. 20, 2018 41 DENSO Korea Euiwang,
Gyeonggi 20.59 Jul. 20,
2011 83 IMC Endmill Daegu 58.25 Dec. 20,
2018 42 PACIFIC Air Controls, Co.
Ltd.
Asan,
Chungnam 26.94 Jul. 20,
2011 84 SNF Korea Co., Ltd. Ulsan 27.95 Dec. 20, 2018
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(3) Service-Type Foreign Investment Zones
• Background of introduction: Manufacturing-oriented complex-type foreign investment zones that provide low-rent factory sites are not effective enough for attracting R&D or other service businesses that require a building space. Therefore, the service-type foreign investment zone system was introduced for industrial complexes and other regions (buildings included).
• Requirements for designation: The land or building to be designated should be available for immediate occupancy and the foreign-invested company’s occupancy demand for which foreign investment notification was completed should be specified. When a certain area in a national or public property (including buildings) has been designated in advance, companies that completed foreign investment notification must account for at least 30 percent of the designated space.
<Occupancy Requirements>
Business
category Detailed business type Employment Minimum FDI
R&D Natural engineering and engineering R&D (KSIC code:
7011, 7012)
5 or more research personnel
The FDI amount should be equal to or more than the price of the land or building to
be leased.
Finance and
insurance Finance and insurance businesses under KSIC
15 or more employees Knowledge
service
Knowledge service businesses under Attached Table 2 of the Enforcement Decree of the Industrial Development Act
Cultural industry
Cultural industries under Article 2 Subparagraph 1 of the Framework Act on the Promotion of Cultural Industries that are prescribed by Attached Table 1 of the Operation Guideline for Foreign Investment Zones
Tourism business
Tourism businesses (excluding casino businesses) under Article 2 Subparagraph 1 of the Tourism Promotion Act that are prescribed by Attached Table 2 of the Operation Guideline for Foreign Investment Zones