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- Private Contract Requirements for State-Owned and Public Properties for Foreign Invested Companies Reinforced
- Information and Communications Service Added for Stand-Alone Foreign Investment Zone
The Ministry of Trade, Industry and Energy (MOTIE) announced that the revised Enforcement Decree and Enforcement Rules of the Foreign Investment Promotion Act will take effect today.
Major revisions include the following.
① Requirements for private contracts for state-owned and public properties have been revised for foreign- invested companies (Article 19 Clause 1 to 3 of the Enforcement Decree).
Previously, foreign- invested companies meeting the requirements of foreign investment share of 10 percent and investment over KRW 100 million were supplied with state-owned and public properties through private contracts, according to the Foreign Investment Promotion Act. However the requirements have been changed so that those foreign- invested companies that maintain a foreign investment ratio of over 30 percent for five years can make private contracts.
Also, foreign- invested companies can make private contracts if they have largely contributed to the Korean economy, through a large-scale foreign investment for example, even if they do not meet the requirements.
② The information and communication service sector has been added for stand-alone type foreign investment zone designation (Article 25 Clause 1 of the Enforcement Decree).
Currently, industries for foreign investment zones are (1) manufacturing (over USD 30 million), (2) tourism (over USD 20 million), (3) logistics (over USD 10 million) and (4) R&D (over USD 2 million). Information and communication service (over USD 30 million) has been added in the revision.
③ Matters that can be processed at Invest KOREA, of the Korea Trade-Investment Promotion Agency, without the need to visit relevant offices were expanded from 11 to 14 types (Attachment 3 of the Enforcement Decree).
④ Procedures to change the amount of investment for stand-alone type foreign investment zones have been simplified (Article 25 Clause 13 of the Enforcement Decree).
Only when the investment amount for stand-alone foreign investment zones was changed within 30 percent was it, approved by the governors of provinces without a review by the Foreign Investment Committee; however, future reinvestment may be changed with only the approval of governors without a limitation on amount.
⑤ Authority and roles of Foreign Investment Ombudsman are reinforced (Article 21 Clause 3 of the Enforcement Decree).
To solve the grievances of foreign- invested companies and enhance the efficiency of relevant regulations, when the Ombudsman recommends a system improvement to an agency, the particular agency needs to reply with the results in writing within 30 days. Also, the ombudsman is required to submit an annual report to the Foreign Investment Committee by the end of February.
⑥ Details about expected employment numbers must be included in forms for foreign investment notification and foreign-invested company registration (Attachment 1 and 17 of the Enforcement Rules).
The foreign investment amount, foreign investment ratio and investment method must be stipulated in forms for foreign investment notification and foreign-invested company registration. The revision requires expected employment numbers as well.
MOTIE noted that the revised Enforcement Decree and Enforcement Rules of the Foreign Investment Promotion Act will make foreign investments contribute to the Korean economy through private contracts and attract data centers of global IT companies, a key to the cloud computing era.
Source: Ministry of Trade, Industry and Energy (June 12, 2013)
** This article was translated from the Korean.