Site Location Support

Site Location Support

Foreign investment zones are designated to attract foreign investments. Businesses that locate into the area shall be provided with incentives. The zones are largely divided into two types: complex and stand-alone. The complex-type foreign investment areas refer to sections of national or general local industrial complexes that have been pre-designated for lease or sales, for the purpose of attracting small- and medium-sized foreign-invested companies. In practice, these sites are for lease. However, the stand-alone type foreign investment zones are designated in units of individual place of business of foreign-invested companies that have been comprehensively established as the investor requests in region, timing, incentives etc. for the purpose of attracting large-size investments.

< Comparison between stand-alone type and complex type >

Category		Stand-alone Type	Complex Type
Overview		Areas of industrial complexes that have been set aside for lease or sales to attract small and medium-sized foreign-invested companies('94~)	Areas to be designated as FIZ in accordance with applications by foreign investors who make massive investment ('97~)
Location		Industrial Complex	No limitation (areas of interest)
Requirement for Designation (Occupancy)		Foreign investment accounting for over 30% of	Minimum investment by business sector (over USD 30 mil. for manufacturing, USD 20 mil. for tourism, USD 10 mil. for logistics etc.)
Location Support		Purchasing land and putting up for lease   - 40% funded by the central government     for the Seoul metropolitan area,     75% for other areas	Subsidizing land purchasing cost (if requested)   - 40% funded by the central government     for the Seoul metropolitan area,     75% for other areas
Benefits from Designation
	Tax Exemption/ abatement (Corporate Tax, Tariff, Acquisition Tax etc.)	Eligibility   - Manufacturing: over USD 10 million   - Logistics: over USD 5 million Exemption/abatement period   - for five years on national tax     (100% for three years, 50% for the     following two years)   - within 15 years on local tax	Eligibility   - The same as requirement for designation Exemption/abatement period   - for seven years on national tax     (100% for five years, 50% for the     following two years)   - within 15 years on local tax
	Rent abatement/ Exemption	75~100% (when necessary, the government or provincial government purchases and leases land.)	100% (when necessary, the government or provincial government purchases and leases land.)

* Stand-alone type FIZs offer greater benefits than complex type FIZs in abatement/exemption of tax or lease.

Designation Procedure (Under Article 18 of the Foreign Investment Promotion Act)

1. Negotiations over FIZ designation   (city or provincial government <->   foreign-invested company)	->	2. Decision on investment   (foreign-invested company ->   city or provincial government)	->
3. Establishment of development plan    (review)   (city or provincial government ->   the Ministry of Land, Transport, and Maritime   Affairs, development area of over 3.3 mil. m2)	->	4. Request for FIZ designation   (city or provincial government ->   the Ministry of Knowledge Economy)	->
5. Feasibility test on FIZ designation   (The Ministry of Knowledge Economy)	->	6. Deliberation by the Foreign Investment    Working-Level Committee   (Chairperson: Vice Minister of Knowledge   Economy)	->
7. Approval by the Foreign Investment    Committee   (Chairperson: Minister of Strategy and Finance)	->	8. Designation and notification   (city or provincial government)

Working Level Discussions for Investment Area Designation

Tax reductions are executed through the procedure of application and determined with certain requirements met. However, location and financial support are determined through negotiations that take into overall consideration the investment details and reliabilities of the concerned investment companies. After negotiations are completed regarding items of investment incentive support, such as whether or not to provide support for location purchasing etc. the procedure for designating foreign invested areas shall commence.

• Land purchase for FIZ by governments
  - The central or provincial government finances the land purchasing cost for FIZ in accordance with its
    share described as in the following table. However, this may change depending on the amount of
    allocated budget or other circumstances.
  

  <Government support for land purchase>

  Classification	The Seoul Metropolitan Area	Other Areas
  share to be financed by the central government	40%	75%
  share to be financed by a city or provincial government	60%	25%

  * The share to be financed by the government is not paid all at once after land purchase, yet it is
    paid in accordance with the occupancy rate in a FIZ, which will be stated in the land sales contract
    (sales contract for industrial complex).

Foreign Investment Committee Deliberation

Upon the completion of investment negotiations, local governments shall attach the analysis of the economic effect, investment execution possibilities etc. of the concerned investment, and request the Ministry of Knowledge Economy to deliberate the foreign invested area designation. Upon the receipt of such requests, the Ministry of Knowledge Economy shall create a review report of foreign invested area designation by referring to the above material, and together with the deliberation item submitted by the local government, present it to the Foreign Investment Working Level Committee. The presented item shall go through the Foreign Investment Working Level Committee, and then the deliberation of the Foreign Investment Committee.

Notification of Designation

When the results are notified after the Foreign Investment Committee completes its deliberation, the head of each local government (city mayors and provincial governors) shall announce the designation of the invested area

Incentives

• Incentives for companies in a FIZ include tax support, financial (site location) support, and cash grant.
• Tax support shall be granted when companies fulfill certain requirements in applying for tax abatement/exemption. Even after the requirements are met, provision of incentives depends on the size or nature of investment.

1. Tax support

• Exemption and abatement of national tax/local tax (Article 121-2 of the Restriction of Special Taxation Act)

Eligible business	tax abatement/exemption
	Item	Period	Requirement
· High degree technology    business and industry    support services · Companies in a    stand-alone type    FIZ	· National Tax   - Corporate Tax   - Income Tax · Local Tax   - Aquisition Tax   - Registration Tax   - Property Tax	· For seven years   - 100% for five years,     50% for two years	· High degree technology business   : no limitation · Investment area   - Manufacturing: USD 30 mil.   - Tourism: USD 20 mil.   - Logistics: USD 10 mil.   - R&D : USD 2 mil. & employment of     over ten master's degree holders
· Companies in a    complex-type FIZ · Companies in a FEZ · Companies in a FTZ · Companies in an ICDZ		· For five years   - 100% for three years,     50% for two years	· Manufacturing: USD 10 mil. · Tourism: USD 10 mil. · Logistics: USD 5 mil. · R&D : USD 1 mil. * ICDZ: USD 10 mil.
· FEZ developer · ICDZ developer			· FDI of over USD 30 mil. · foreign investment of over 50%,    total cost of USD 500 mil.
· Jeju Investment    Promotion Zone    developer			· FDI of over USD 10 mil. · foreign investment of over 50%,    total cost of USD 100 mil.

* The rate and period of abatement/exemption of local tax may be adjusted (for up to fifteen years) under
   local government ordinances pursuant to Article 9 of the Local Tax Act.

• Exemption or abatement of tariff etc. (Article 121-3 of the Restriction of Special Taxation Act)

Eligibile business	tax abatement/ exemption
	Item	Period	Capital goods
· High degree technology    business and industry    support services · Companies in a    stand-alone type FIZ	Tariff Special excise tax Value added tax	Goods for which import declarations are made within three years after introduction	Capital goods imported with investment in newly issued stock, FTZs are non-tariff areas. (no tariff on imports, duty drawback for domestic goods)
· Companies in a    complex-type FIZ · Companies in a FEZ · Companies in a FTZ	Tariff

2. Financial (site location) support (Article 14 of the Foreign Investment Promotion Act)

• Eligibility: a company with over 30% foreign ownership or with a foreign national as the primary shareholder
• Limitation
  1. New investment: up to 50% of foreign investment
  2. Reinvestment: choice between i) up to 50% of foreign investment and ii) up to 25% of surplus profits
  
  (in which case, FDI must account for more than 25% of total investment.)

Financial Support	Supportive Measures
(i) Support for site location   1. Land purchase	· Provision of industrial sites through designation of FIZs or purchase of land   - Land purchasing cost: Seoul metropolitan area (40% financed by the central     government, 60% by city or provincial governments)     Other areas (75% by the central government, 25% by city or provincial     governments)
2. Rent abatement     (National properties)    * Rent period is renewable      for up to 50 years.	Eligible Business	Exemption
	Stand-alone FIZ	100% exemption
	High degree technology business & over USD 1 mil.	Complex-type FIZ	100%
		Industrial complex	50%
	Manufacturing business & over USD 5 mil.	Complex-type FIZ	75%
		Industrial complex	50%
	* Rent abatement on public properties shall be determined by    ordinances of the provincial governments.
(ii) Land subsidy	· To subsidize differences between the original price and abated sales cost of    lands owned by the central or local government, government investment    institution or the private sector   - depending on provisions of regional ordinances
(iii) Rent subsidy	· To subsidize differences between the original rent and abated rent price on    lands owned by the central or local government, government investment    institution or the private sector
(iv) Training subsidy	· A monthly subsidy of KRW 100,000 to KRW 500,000 per capita for up to    six month in the case of employment of over 20 new workers
(v) Employment subsidy	· A monthly subsidy of KRW 100,000 to KRW 500,000 per capita for up to    six month in the case of employment of over 20 new workers

3. Cash grant (Article 14-2 of the Foreign Investment Promotion Act)

• Eligibility: a company with over 30% of foreign investment ratio

Classification	Details
Eligibility	i) High degree technology business or industry supporting services with over    USD 10 million of FDI ii) Parts and materials business with over USD 10 million of FDI iii) Business in the R&D sector with over USD 5 million of FDI and over 20 employees     with master's degrees
Purpose	· Land purchasing cost, construction cost, equipement purchasing cost, employment    and training subsidies, infrastructure-building cost, etc.
Evaluation Items	· Spillover effect of technology transfer, job creation, location of backward areas,    whether the foreign investment is overlapped with domestic investment, etc.
Financial Support	· Support for part of FDI after negotiation with investors and deliberation by the    Foreign Investment Committee (at least over 5%)
Requirements for beneficiaries	· Operation of the business for which cash grant was provided for ten years · Maintenance of the minimum number of employees under the cash grant agreement · In the case of breach of the agreement, the subsidy shall be abated or refunded,    or the period of mandatory operation shall be extended.
Application Procedures	i) Request for consultation in advance (written or verbal request) ii) An applicant for cash grant shall submit an investment proposal to the Minister of     Knowledge Economy with the following information.    * The amount of total investment, purpose of investment, size of employment,      spillover effect of technology transfer, contribution to the local economy, etc. iii) The Minister of Knowledge Economy shall decide whether to support the applicant after     negotiation with the foreign investor and consultation with the Minister of Strategy and     Finance iv) An agreement on cash grant will be concluded.    * Cash grant will be paid in a lum sum within a year or in a ten times installment within      five years after the date of the agreement.
Note	· A company may apply for cash grant and other financial assistance    (mostly support for site location) at the same time for up to the amount    supposed to be offered by cash grant.

* Land-purchasing cost is included in government cash grant for a company provided with an industrial site.

>> It is beneficial to receive cash grant for high degree technology businesses that do not take up large space
     and other financial support for businesses that require large industrial sites.

Current Status

Complex-Type FIZ (as of January 2009)

Classification	Within a National Industrial Complex(3)			Within a General Industrial Complex (10)
	Daebul	Gumi	Osong	Cheonan*	Pyeongdong*	Sacheon
Location	Yeongam, South Jeolla	Gumim, North Gyeongsang	Cheongwon, North Chungcheong	Cheonan, South Chung	Gwangju Metropolitan City	Sacheon, South Gyeongsang
Management Authority	Industrial Complex Corporation
Classification	Within a General Industrial Complex (10)
	Ochang	Inju	Dalseong	Jangan1,2	Dangdong	Jisa
Location	Cheongwon, North Chungcheong	Asan, South Chungcheong	Dalseong, Daegu	Hwaseong, Gyeonggi	Paju, Gyeonggi	Busan Metropolitan City
Management Authority	Industrial Complex Corporation			Hwaseong City Government	Paju City Government	Busan-Jinhae FEZ Authority

Category	Location	Size (1,000m2)	Initial Designation	Total Investment	FDI (US$million)		Business Sector
					Planned	Executed (As of Dec.2008)
Taeyang Corporation	Sacheon, South Gyeongsang	171.6	Oct. 28, 1999	3,978	331	157	Ceramic Condenser
Cheonan Movie Cultural Complex	Cheonan, South Chungcheong	493.3	Nov. 2, 1999	547	37	17	Animation
J.S.T	Yangsan, South Gyeongsang	20.2	March 3, 2000	359	32	32	Electronic/ Electric Parts
BASF	Yeosu, South Jeolla	671.2	Dec. 30, 2000	4,450	232	291	Petrochemical Products
Korea Auto Glass	Yeongi, South Chungcheong	190.4	Dec. 30, 2000	1,000	40	34	Automotive Safety Glass
Dongbu Electronics	Eumseong, North Chungcheong	137.2	June 29, 2001	16,983	150	150	Semiconductor Wafer
Sumitomo	Pyongtaek, Gyeonggi	252.3	Dec. 29, 2003	13,256	287	196	LCD Color Filter
S-LCD	Asan, South Chungcheong	192.6	May 25, 2004	39,000	1,820	1,750	TFT-LCD
Asahi Glass	Gumi, North Gyeongsang	329.6	Dec. 21, 2004	2,420	121	362	LCD Glass Sheet
MCC Logistics	Busan, Gamcheon	67.8	Dec. 23, 2004	170	14	14	Logistics
AvanStrate Korea	Pyongtaek, Gyeonggi	88.7	Dec. 30, 2004	1,695	65	278	LCD Glass Sheet
Hoya Electronics Korea	Pyongtaek, Gyeonggi	18.6	Dec. 30, 2004	805	55	79	LCD Photo Mask
LINTEC Korea	Cheongwon, North Chungcheong	49.6	Dec. 31, 2004	390	39	42	Semiconductor Processing Materials
Air Liquide Korea	Yeosu, South Jeolla	15.2	Dec. 27, 2004	1,250	65	140	Industrial Gas
Toray Saehan	Gumi, North Gyeongsang	192.8	Dec. 27, 2004	3,310	100	55	LCD film
AGC Display	Cheongwon, North Chungcheong	310.1	May 27, 2005	3,286	329	154	LCD Glass Sheet
Linde Korea	Yongin, Gyeonggi	24.4	Nov. 28, 2005	949	31	139	Industrial Gas
Prax air	Yongin, Gyeonggi	16.6	Nov. 28, 2005	2,212	31	37	Industrial Gas
Times Aerospace Korea	Kimpo, Gyeonggi	336.8	March 29, 2006	1,406	250	141	Helicopter Performance Improvement
Hanuk Technoglass	Gumi, North Gyeongsang	105.8	May 8, 2006	320	30	-	PDP Glass Sheet
Air Products Korea	Ulsan	23.8	Dec. 21, 2006	560	56	56	Industrial Gas
Lafarge	Dangjin, South Chungcheong	142.5	Dec. 21, 2006	300	30	30	Gypsum Board
Asahi PD Glass Korea	Gumi, North Gyeongsang	62.3	Dec. 21, 2006	360	46	48	PDP Glass Sheet
Daesan MMA	Seosan, South Chungcheong	63.0	April 23, 2007	1,532	37	37	PMMA, Artificial Marble
Stanford Hotel	Seoul	3.4	April 23, 2007	420	20	9	Hotel
Yeosu Ocean Resort	Yeosu, South Jeolla	116.4	July 31, 2007	3,353	198	190	Hotel and Resort
Taeyoung Horizon	Ulsan	43.3	Nov. 30, 2007	731	15	13	Port Logistics
3M Korea	Naju, South Jeolla	5.5	November 27, 2007	500	55	-	Fine Glass Beads
Tonen Specialty Seperator Korea Ltd.	Gumi, North Gyeongsang	229.0	March 31, 2007	2,500	250	21	Secondary Battery Seperator
Solar World Korea	Wanju, North Jeolla	69.3	July 25, 2008	124	30	10	Photovoltaic Module
Tagaz Korea	Boryeong, South Chungcheong	387.8	July 30, 2008	6,500	65	30	Automotive Components/ Products
Praxair Korea	Asan, South Chungcheong	15.8	July 30, 2008	477	30	5	Industrial Gas
GS NOC	Gumi, North Gyeongsang	74.6	Dec. 18, 2008	890	31	-	EDLC carbon materials
Danone	Muju, North Jeolla	12.0	Feb. 27, 2008	609	32	-	Dairy Products
Total	-	4,933.5	-	116,742	5,048	4,517	-

Free Trade Zones

Industrial complexes, airports, seaports, distribution complexes, freight terminals etc. are designated as Free Trade Zones, which are specially designated zones for manufacturing and logistics businesses to move in and create mutual connections to generate synergies.

In a Free Trade Zone, reductions on national and local taxes are provided according to the type and scale of invested businesses. Also, customs is eliminated to reserve tariffs and apply 0% in value added tax on foreign goods and specific domestic goods that are brought into the Free Trade Zone.

This creates an advantage of not having to go through the complicated procedures of refunds etc. when exporting products manufactured from imported raw materials. Also, lands or factories etc. can be leased for a long time at a low price. Such conditions create favorable business conditions for foreign-invested companies in export-oriented manufacturing businesses, logistics businesses such as warehousing, logistics, loading, packing etc. as well as in wholesale for import and export trades. In particular, Free Trade Zones are the best location for large scale foreign investment companies that operate both the manufacturing and logistics businesses.

The Free Trade Zone Management Office, the managing body of the Free Trade Zones, provide a one-stop administration service by directly handling investment notification, permission to move in, factory construction permission, and import and export approval etc.

Eligibility for occupancy Domestic and foreign-invested manufacturing companies mainly for export purposes Companies in wholesale mainly for import and export trades Companies in logistics businesses such as warehousing, exhibitions, loading, transportation etc. Businesses supporting tenant companies through finance·customs clearance·data processing, etc. Occupant Priority High-tech businesses announced by the Ministry of Knowledge Economy High degree technology business & industry support services under the Tax Exemptions and Exceptions Act Businesses to concentrate in attracting foreign investments in connection to regional strategic industries Manufacturing businesses having profound technology transfer and employment impacts

Incentives

Category	Eligibility	Details
Tax Abatement	· High degree technology business &   industry support services · Manufacturing: USD 10 million · Logistics: USD 5million	· National tax (corporation tax, income tax)   reduction for five years(100% for three years,   50% for two years) · 100% exemption of acquisition, registration,   general excise tax for 15 years
Customs Tariff Exemption	· Free Trade Zones are outside the customs area, hence imports are exempt for tariffs. · Exemption of customs tariff or duty drawback on notified domestic goods carried into   Free Trade Zones
Exemption of Value-Added Tax	· Domestic goods notified to have been carried into Free Trade Zones · Imports/ services supplied or provided between tenants businesses of the   Free Trade Zone
Rent Reduction	· 100% for Free Trade Zones - Foreign-invested companies with USD over 10 million in foreign investment - With over 30% of the foreign investment ratio, and over USD 1million in foreign    investment - Over USD 500,000 in foreign investment in high-tech businesses,    high degree technology business & industry support services

Designation Status

Free Trade Zones are divided into an industrial complex type and an airport/seaport type. Distribution center, cargo terminals, etc. can also be designated as FTZs.

As of December 2008, seven complex-type FTZs and five port/airport-type FTZs have been designated. (Additionally designated FTZs include two complex-type FTZs, one to be established and another to be expanded, and four port/airport-type FTZs, two to be established and two others to be expanded.)

Industrial Complex Type FTZs

Classification	Masan	Iksan	Gunsan	Daebul	Donghae	Yulchon
Date of designation	1970.1.1	1973.10.8	2000.10.6	2002.11.21	2005.12.12	2005.12.12
Area (10,000m2)	95.04	31.02	125.4	115.5	24.75	34.32
No. of occupants (foreign-invested companies)	74(46)	31(6)	2(2)	9(2)	-	-
Foreign investment (USD 1,000)	122,289	5,313	43,822	62,622	-	-
Employment (no.)	6,735	1,156	174	3,119	-	-

Ulsan FTZ was newly designated, while the existing Masan FTZ was expanded. Gimje was designated as an area where an FTZ is to be established.

< Additional Designation of Industrial Complex Type FTZs on December 8, 2008 >

Classification	Ulsan FTZ (newly designated)	Masan FTZ (expanded)	Gimje FTZ (to be established)
Location	Within Shinil General Industrial Complex in Onsan- eup, Cheoyong-ri and Cheongryang-myeon, Yongam-ri in Ulju-gun, Ulsan Metropolitan City	Within Masan FTZ in Yangdeok-dong and Bongam-dong, Masan city, South Gyeongsang Province	Gimje Horizon Industrial Complex in Bugeo-ri, Baeksan-myeon, Gimje city, North Jeolla Province
Area	1,297,482m2	953,576m2 (no change in space)	991,740m2
Land Use	classified into production facilities district, logistics facilities district, support facilities district, public facilities district etc.	Expansion of buildings and facilities in the existing Masan FTZ (construction of standard factories, road expansion near Samho stream, construction of parking tower, maintenance of roads whtin the complex) without site expansion	classified into production facilities district, logistics facilities district, support facilities district, public facilities district etc.
Inquiry and References	The Ulsan Metropolitan City Government (Economic Policy Planning Division)	The South Gyeongang Provincial Government (International Trade Division) and Administrative Agency of Masan FTZ (Export Industry Team)	The North Jeolla Provincial Government (Investment Promotion Division)
Management Authority	Minister of Knowledge Economy

Airport/Seaport Type FTZs

Category	Busan Seaport	Gwangyang Seaport	Incheon Seaport	Incheon International Airport
Designation Date	Jan. 1, 2002	Jan. 1, 2002	Jan. 1, 2003	Apr. 6, 2005
Size (10,000m2)	531.3	673.2	215.82 (228.69)	208.89
Tenant Businesses Number	6	63	21	Logistics Complex 14

Pohang port FTZ was newly designated, while Busan port (and part of Busan new port) and Gwangyang port FTZs were expanded. Pyeongtaek port, Dangjin port, and Busan port (Eungdong district) were designated as FTZs-to-be.

<Additional designation of airport-port type FTZs on December 8, 2008>

Classification	Pohang Port FTZ (newly designated)	Busan Port FTZ (expanded)	Gwangyang Port FTZ (expanded)
Location	Heunghae-eup, Buk-gu, Pohang city, North Gyeongsang Province	Nulcha-dong and Seongbuk- dong in Gangseo-gu, Busan Metropolitan City	Doi-dong and Hwanggeum- dong, Gwangyang city, South Jeolla Province
Area	709,531m2	1,393,068m2	2,125,028m2
Land use	Comprehensive logistics center, support facilities, public facilities	2-2 container quay area, 2-3 container quay area	Logistics & distribution complex, Support facilities complex etc.
Inquiry and References	The North Gyeongsang Provincial Government (Economy/Trasnportation Policy Division)	The Busan Metropolitan City Government (Marine Port Division)	The South Jeolla Provincial Government (Marine Port Division)
Management Authority	Minister of Land, Transport, and Maritime Affairs
Classification	Pyeongtaek -Dangjin Port FTZ (to be established)	Busan Port FTZ (to be established in Eungdong district)
Location	Shinyoung-ri, Poseung-eup, Pyeongtaek city, Gyeonggi Province	Yongwon-dong, Angol-dong, Jedeok-dong, Eungdong-dong in Jinhae, South Gyeongsang Province
Area	1,428,915m2	2,484,000m2
Land use	Comprehensive logistics center, support facilities, public facilities	Assembly and processing facilities, support facilities, research venture facilities
Inquiry and References	The Gyeonggi Provincial Government (Railway/ PortLogistics Division)	The South Gyeongsang Provincial Government (Port Logistics Division)
Management Authority	Minister of Land, Transport, and Maritime Affairs

Free Economic Zones

Free Economic Zones are special areas where the application of domestic laws is alleviated through the enactment of laws on designation and operation of Free Trade Zones in order to make it possible to provide various support towards equipping infrastructures etc. such as high-tech industrial complexes and hinterlands to make it possible to conduct manufacturing, logistics, and tourism, and by furnishing pleasant living conditions that will attract high quality human resources from home and abroad. In the Free Trade Zone various regulations are alleviated to provide various benefits such as establishment and operation of foreign education institutions, hospitals, foreign language service, permission on foreign currency, broadcasting, tax reductions, and fund support.

Objective of FEZ Establishment

• Designed to enhance national competitiveness through deregulation and FDI promotion
• Legal ground: The Act on Designation and Management of Free Economic Zones

FEZ Designation Procedures

• Free Economic Zones are designated by the Minister of Knowledge Economy after the FEZ Committee deliberates development plans devised by a city mayor or provincial governor.

Eligibility for Occupancy · Foreign-Invested Companies · Manufacturing, logistics, medical institutions, education institutions, foreign broadcasting, financial institutions, etc.

Incentives

Category	Eligibility	Details
Tax Reduction	· Manufacturing: USD over 10 million · Tourism: USD over 10 million · Logistics: USD over 5 million	· National tax (corporation tax, income tax)   reduction for five years   (100% for three years, 50% for two years) · 100% exemption on local taxes (acquisition,   registration, property, comprehensive land tax)   for three years
Customs Tariff Reduction	Imported capital goods used directly for businesses eligible for income tax/corporate tax reductions	100% exemption for three years
Financial Support	· Reduction of dues for developers, including farmland dues · Provision of government support for basic infrastructure · Reduction of rent for foreign-invested companies (up to 100%)
Improvement of Management Environment for Foreign-Invested Companies	· Exclusion of foreign-invested companies from regulations on the Seoul metropolitan area   including regulations on factory establishment · Exclusion of foreign-invested companies from the mandated employment of decorated   citizens and the disabled · Expansion of unpaid holidays for employees in foreign-invested companies,   extension of period and expansion of business sectors in dispatching workers · Removal of investment ceilings on companies in a FEZ
Improvement for Living Conditions for Foreign nationals	· Establishment of foreign educational institutions   (primary, middle, high school, and university) · Establishment of foreign hospitals (which also treat Korean nationals) · Foreign language services at government and public offices
Streamlined Administrative Procedures	· Collective approval of execution plans for 38 legal agendas · Free Economic Zone Authority established as a one-stop service provider

Designation State

<FEZs designated in October 2003>

Classification	Incheon	Busan-Jinhae	Gwangyang Bay Area
Location	Three areas- Songdo, Youngjong, Cheongna	Five areas in Busan, Jinhae	Five areas - Yulchon, Shindeok, Gwangyang, Hwayang, Hadong
Area	209km2	104.8km2	88.98km2
Date of designation	on August 6, 2003	on October 27, 2003	on October 27, 2003

<FEZs designated in April 2008>

Classification	Yellow Sea (Pyeongtaek, Dangjin)	Saemangeum-Gunsan	Daegu-Gyeongbuk
Location	Areas in South Chungcheong and Gyeonggi Provinces	Gunsan and Busan area in North Jeolla Province	North Gyeongsang Province and Daegu Metropolitan City
Area	55.05km2	66.99km2	39.55km2
Vision	Center of global cooperation in the Yellow Sea region with Pyeongtaek port	Center of future-oriented industries and tourism/ leisure businesses in East Asia	Inland FEZ focusing on knowledge-based industry

<Overview by region (566km² in total) >

		Gyeonggi, South Chungcheong	Daegu, North Gyeongsang	North Jeolla
Title		YESFEZ	DGFEZ	SGFEZ
Location		South Chungcheong (Dangjin, Asan, Seosan), Gyeonggi (Oyeongtaek, Hwaseong)	Daegu, North Gyeongsang (Gyeongsan, Youngcheon, Gumi, Pohang)	North Jeolla (Gunsan, Buan)
Area		55.051km2	39.546km2	66.986km2
Airport/ port		Pyeongtaek port, Dangjin port	Daegu international airport	Gunsan port, Gunjang port
Year of completion (expected)		2025	2020	2030
Budget		KRW 7445.8 bil.	KRW 4607.8 bil.	KRW 5301.7 bil.
Finan- cing	The central government	475(0.6%)	5,210(11%)	4,529(8.5%)
	Local government	4,779(6.4%)	11,656(26%)	4,790(9.0%)
	Private sector/ Others	69,204(93.0%)	29,212(63%)	43,698(82.5%)
Basic initiative		· Manufacturing   (automobile, IT, BT) · Value-added logistics · Bio	· Service (education,   healthcare, fashion) · Manufacturing   (IT,parts & materials)	· Manufacturing(automobile,   aerospace, shipbuilding) · Environment-friendly industry · Tourism and leisure
		Incheon	Busan, South Gyeongsang	South Jeolla and South Gyeongsang
Title		IFEZ	BJFEZ	GFEZ
Location		Incheon (Younsu, Jung-gu, Seo-gu)	Busan (Gangseo-gu), South Gyeongsang (Jinhae city)	South Jeolla (Yeosu, Suncheon, Gwangyang), South Gyeongsang (Hadong county)
Area		209.4km2	104.8km2	90.48km2
Airport/ port		Incheon international airport, Incheon port	Kimhae airport, Busan new port	Gwangyang port
Year of completion (expected)		2020	2020	2020
Budget		KRW 26593 bil.	KRW 8440.6 bil.	KRW 13547.3 bil.
Finan- cing	The central government	16,775(6%)	21,901(26%)	56,030(42%)
	Local government	70,600(27%)	27,695(33%)	38,365(28%)
	Private sector/ Others	178,555(67%)	34,810(41%)	41,078(30%)
Basic initiative		· International business,   logistics center · High-tech industries including   IT·BT etc. · Tourism & leisure	· Global logistics center · High-tech parts and   materials, R&D · Tourism & leisure	· Global logistics & production   base · Fine chemical, new materials · Tourism & leisure

<Comparison of FIZ, FTZ, FEZ>

	Foreign Investment Zone		Free Trade Zone		Free Economic Zone
	Complex type	Stand-alone type	Industrial complex	Airport, port, logistics
Governing law	Article 18 of the Foreign Investment Promotion Act		Article 4 of the Act on Designation and Management of Free Trade Zones		Article 4 of the Special Act on Designation and Management of Free Economic Zones
Objective of designation	FDI promotion, transfer of advanced technologies, job creation		FDI promotion, trade promotion, regional development	FDI promotion, development of a global logistics base	FDI promotion, enhancement of national competitiveness, balanced regional development
Location	Within an industrial complex	No limitation	Areas near port, airport, industrial complexes	Port, airport, distribution center, cargo terminal, etc.	Areas near international airport, port
Characteristics	Managed as industrial complex for lease	Designated by individual operation unit	Non-tariff district		Status of a special administrative district (regional cooperative) * 20 mil. - 60 mil. pyeong (One pyeong equals 3.3 square meters)
Designation authority	Mayor, Governor * Deliberation by the Foreign Investment Committee		Minister of Knowledge Economy		Minister of Strategy and Finance (Minister of Finance and Economy) -> Minister of Knowledge Economy since March 2008
Qualifications for Occupancy	· at least 30%   of foreign   investment   ratio - manufacturing  ,logistics, etc. - FDI equivalent   to double the   land price   within three   years after   land purchase	· Business   sector & FDI   requirements - manufacturing   :at least USD   30 mil. - tourism:   at least USD   20 mil. - logistics:   at leat USD   10 mil. - R&D:   at leat USD   2 mil. (3 years, 10 researchers with masters' degree)	· Domestic or foreign   exporters · Foreign-invested company · Wholesale exporter · Comprehensive logistics   business		· Foreign-invested companies · Manufacturing, logistics,   medical institutions,   educational institutions,   foreign broadcasting   services, financial   institutions, etc.
Requirements for tax abatement/ exemption	· Manufacturing  : over USD    10 mil. · Logistics: over   USD 5 mil.	same as the above requirements for designation	same as the complex-type FIZ		· manufacturing, tourism:   USD 10 mil. or up · logistics, medical institute:   USD 5 mil. or up
Taxes subject to exemption/ reduction	· Corporate tax,   income tax   : 5 years · Local tax: for   up to 15 years	· Corporate tax   , income tax:   for 7 years · Local tax: for   up to 15 years	· Corporate tax, income tax   : 5 years(100% for 3 years,    50% for 2 years) · Local tax: adjusted within   15 years in accordance with   ordinances		· Corporate tax, income tax   : 5 years (7 years for stand-    alone FIZs) · Local tax: for up to 15 years
	Corporate tax and income tax reduction for seven years for industry support service business and high-tech business regardless of regions (100% for 5 years, 50% for 2 years)
Tariff Reduction	Tariff exemption on capital goods for three year		Suspension of tariff imposition		Tariff exemption on capital goods for three year
Rent	about 10/1,000 of the land price (notification by the Ministry of Knowledge Economy)	100% exemption on national or public properties	about 10/1,000 of the land price (to be determined by management authorities after consultation with the Ministry of Strategy and Finance)		about 10/1,000 of the land price(to be determined by regional management administration)
Rent reduction/ exemption	· Advanced   technology &   USD 1 mil. or   up : 100% · Manufacturing   & USD 5 mil.   or up : 75%		foreign investment & USD 10 mil., 30% foreign investment ratio & USD 1 mil., high-tech business & USD 0.5 mil., lease exemption		Regional management administration determines the reduction rate in reference to regional ordinances. (50%~100%)
Financial support	· The Seoul Metropolitan area :   40%financed by the central   government · Other areas : 75% financed by   the central government		Decision to be made on the government support ratio at the designation phase		Undecided
Note	· Unified(on December 31, 2004)  - Amendment to the Foreign    Investment Promotion Act * Management of complex-type   FIZs was subject to the   provisions of the Act on   Industrial Cluster and Factory   Establishment before the   application of the Foreign   Investment Promotion Act.		· Unified(on June 23, 2004)  - Amendment to Designation    and Management of Free    Trade Zones    (on March 22, 2004)		Additional FEZ designation (on May 6, 20086)
Designated areas	· 16 complex-type FIZs:Cheonan   , Ochang, Inju, Gumi 1·2,   Pyeongdong, Daebul, Jinsa,   Jangan 1·2, Dangdong, Sacheon,   Osong, Dalseong, Oseong,   Pohang · 36 stand-alone type FIZs :   S-LCD, Asahi Glass Fine Techno   Korea, etc.		· 8 industrial complexes:   Masan, Gunsan, Daebul,   Iksan, Donghae, Yulchon,   Ulsan, Gimje · 1 airport: Incheon   Internaitonal Airport · 5 ports: Incheon, Busan,   Gwangyang, Pohang,   Dangjin		· 3 existing FEZs: Incehon,   Busan(Jinhae), Gwangyang · 3 newly added FEZs: North   Jeolla(Seamangeum-   Gunsan), Daegu-Gyeongbuk   (Gumi, Gyeongsan,   Younghceon), Yellow Seas   (Pyeongtaek, Dangjin)

Last Updated in December 2009