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FAQ

  • Title
    Is there a rent limit for a complex-type foreign investment zone?
  • Content

    A complex-type foreign investment zone limits the rent of factory land through standard factory area ratio and minimum investment by sector to maximize the efficiency of land usage by securing a factory site that is suitable for the factory construction area and restricting on the unnecessary factory land rent by companies. The foreign-invested companies that wish to move into the complex-type foreign investment zone will have to meet the following two conditions:

    A foreign investment zone regulates the limitation of rent with the standard factory area ratio in accordance with Article 15 of the management guideline. The land area will be calculated by applying the standard factory area ratio by sector and the sectors that have less than 12% of the area ratio will apply 12% of the standard factory area ratio.

    Also, when a foreign-invested company moves into a complex-type investment zone, the company should have foreign direct investment of more than the land price as a minimum investment system.

  • Title
    What measures will be put in place to a foreign-invested company in a foreign investment zone does if it has not fully executed its business plan?
  • Content

    A tenant company in a foreign investment zone will have to execute its investment plan within 5 years. If it has failed to do so for unavoidable reasons, it will be given a 1 or 2 years of grace period. However, if it fails to attract foreign investment within a certain period of time, it will have to pay an executory rent (5% of the land price) for the exceeded area compared to the investment. If it fails to attract the foreign investment after the grace period, it will have to pay an executory rent for the total rent area. 

  • Title
    What is the procedure for establishing a factory?
  • Content

    If the process is planned and the factory is to be established in an industrial complex, then an appropriate industrial complex has to be selected on a preferential basis. With the conclusion of a move-in contract, it is regarded as an approval of factory establishment. The procedures for the construction and operation of the factory will follow. 

    If a factory is to be established in a location other than an industrial complex, the investor will have to find out if the location is appropriate for establishing factories and receive an approval from the relevant local government before the construction and operation of the factory. The approval of factory establishment is compulsory for areas of more than 500m2, but it is also possible to receive an approval for areas of less than 500m2.

  • Title
    Do all factories go through the approval of factory establishment procedure?
  • Content

    If the total area combining each floor area of the building to install machinery and devices for manufacturing facilities and the horizontal projected area of the outdoor structure used as manufacturing facilities are less than 500, an approval of factory establishment is not required. If the company wishes to receive agenda processing and the approval of factory establishment at the same time, a factory with the area less than 500 can receive one. 

    -

    If a factory registered as having less than 500 of factory construction area is expanded and the factory construction area exceeds 500, it will not fall under an approval of factory expansion but an approval of factory establishment.    


    A separate approval of factory establishment is not required for the following as they are reckoned to have received the approval of factory establishment: 

    -

    If a manufacturing company signs a move-in contract with the management agency in an industrial complex. 

     

    -

    If a company, which has been relocated to a free trade zone and received approvals of venture business plan and industrial complex development action plan, develops the industrial complex, it will be reckoned to have received an approval of factory establishment.  

     

  • Title
    Where can I find information on the current status of foreign investment zones and national industrial complexes?
  • Content

    Please visit the Korea Industrial Complex Corp. website (www.e-cluster.net) for more information. 

     

  • Title
    Should a company have an ownership over the land when applying for the approval of factory establishment?
  • Content

    A company does not have to have an ownership over the land when applying for the approval of factory establishment, but just the right to use the land. If the region permits factory establishment after the confirmation of the site standards, the company can receive the written consent for land use from the land owner and apply for the approval of factory establishment even before the transfer of the land ownership.

  • Title
    Is it possible to handle approval of factory establishment and factory building permit at the same time at a region where factory establishment is allowed?
  • Content

    In the case of an approval of the establishment of a factory in accordance with Article 13 of the Industrial Cluster Development and Factory Establishment Act, the construction permit will be processed as an agenda. Therefore, a company can apply for the approval of factory establishment and factory building permit at the same time to save time to establish a factory.

    Article 17.1 of the Foreign Investment Promotion Act states that the batch process civil affairs including the approval of the factory establishment ensures the processing of various licensing issues, which can save time to handle the civil affairs. 

  • Title
    What are the rules for establishing factories in the Seoul Metropolitan Area?
  • Content

    Act but also overpopulation control area, growth management area and nature conservation area classified by The Seoul Metropolitan Area regulates the permission or restriction of the establishment, expansion or relocation of a factory in accordance with not only the regulation on total quantity of the factory establishment of the Seoul Metropolitan Area Readjustment Planning the asterisk of the enforcement ordinance of the Industrial Cluster Development and Factory Establishment Act. 

  • Title
    What is the procedure for a tenant company in an industrial complex to sell its factory after its construction?
  • Content

    The company will have to declare its sale to the management agency in accordance with Article 39.2 of the Industrial Cluster Development and Factory Establishment Act and Article 50 of the enforcement ordinance of the Act.  

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    In the case, the sale price will be calculated by multiplying the acquisition cost by the producer price index from the date of acquisition and adding that to the maintenance cost of the industrial complex. The sale price of the factory will be decided considering the market value appraisal. 

     

  • Title
    What is the procedure for a factory acquisition in an indsutrial complex through auction?
  • Content

    The party, which has purchased an industrial site or a factory of tenant companies or support agencies in accordance with auction or other laws stated under Article 40 of the Industrial Cluster Development and Factory Establishment Act, will have to sign a move-in contract within a year from the date of acquisition.

    The acquisitor, who has failed to sign a move-in contract within a year from the date of acquisition and is not  the Korea Land and Housing Corporation, Korea Water Resources Corporation, Small & Medium Business Corporation and financial institutions, will have to transfer the acquisition to a third party within a year.  

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