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Complextype Foreign Investment Zone

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A complex-type Foreign Investment Zone (FIZ) is designated for lease or transferred exclusively to foreign- invested companies. The lease term is up to 50 years and must be renewed every 10 years. Companies moving into this type of zone are provided with low-cost rent and benefits such as rent reduction or tax credits depending on the investment.

Type of Businesses Eligible for Occupancy

The categories of business eligible to take the occupancy in a complex-type FIZs are as follows, while the categories of business eligible to take occupancy in each zone shall be specified in a master plan for management.

  • Business holding technologies for new growth engine industry (Restriction of Special Taxation Act)
  • Categories of business with advanced technologies or advanced products (Industrial Development Act)
  • Research institutes affiliated with enterprises and research and development service business (Special Act on Support of Scientists and Engineers for Strengthening National Science and Technology Competitiveness)
  • Complex logistics terminal business (Act on Development and Management of Logistics Facilities) or joint collection & delivery center (Distribution Industry Development Act)
  • Other categories of business that a management agency determines, taking account of the industrial characteristics of the relevant region.

Occupancy Requirements

Only companies registered as a foreign-invested company where the share of the foreign-invested company is at least 30 percent (10 percent in cases of standard-type factories of Daebul Foreign Investment Zone, and 50 percent in case of complex logistics terminal operation and joint collection & delivery centers). If a new factory facility (workplace) is constructed or new machine or device is installed in an existing building, the same corporation shall install factory facilities, machinery, and devices that can be separately accounted for in accounting, separate from existing factory facilities. In addition, no existing foreign-invested factory may be relocated. However, where it relocates from one FIZ to another, or where a foreign-invested company increases the foreign investment ratio to above 30%, such factory may be relocated with approval from the person having the authority to manage the relevant FIZ in an industrial complex.

Limit on Occupancy

Factory construction area should satisfy the standard area ratio of a factory of the relevant category of manufacturing business (12 percent or higher) and the limit on lease area for each company should be at least equivalent to the land price. In short, the limit on occupancy is related to the amount of funds to be invested by the size of the area where the foreign- invested company intends to move into.

Rents and Rental Security Deposits

Annual rent in a complex-type FIZ shall be determined by multiplying the acquisition value (referring to the publicly announced land price, where a publicly announced individual land price exceeds the acquisition value) of the relevant complex-type FIZ by at least 1 percent. The rents for "a relocated company that has failed to fulfill the amount of foreign investment and the area for construction of a factory applied when determining the limit on occupancy", "a relocated company that has failed to meet the qualifications for occupancy" and "a relocated company that falls under any ground for termination of the occupancy contract", shall be determined by the Minister of Trade, Industry and Energy, following consultation with the Minister of Strategy and Finance and a mayor/provincial governor, in an amount calculated by multiplying the acquisition value by at least 5 percent. Rental security deposits: it shall be an amount calculated by multiplying the acquisition value by at least 5 percent and paid in cash. Companies in foreign investment zones may instead request to replace a cash payment with the submission of a guarantee insurance policy or payment certificate of bank.

Reduction and Exemption of Rents

In applying a rate of reduction and exemption, the investment amount that has been paid in full to invest shall be construed as the amount of foreign investment, and the time that falls a month before the issuance of payment notice of the rent shall be construed as the date of calculation of number of full-time workers. The rents for national and shared properties are 5 percent or more of acquisition amount but the companies in FIZs may lease the site with 1 percent or more of the acquisition amount.

Reduction and Exemption of Rents for Companies in Complex-Type FIZs
Reduction and Exemption of Rents for Companies in Complex-Type FIZs : (Investment amount, The number of full-time employee)
Reduction rate Business Condition Notes
Investment amount The number of full-time employee
0% Tenant company Market rental fee
(1 percent of acquisition amount)
- -
75% Manufac -turing At least USD 5 million - -
At least USD 2.5 million 70-150 or less -
90% Manufac -turing At least USD 2.5 million 150-200 or less -
100% Manufac -turing At least USD 5 million - Companies in material and components complexes
At least USD 2.5 million 200 or more -
Techno- logies for new growth engine industries At least USD 1 million - -
  • ※ Rate of reduction means the reduction rate applying general rent, real rent is 5 percent of acquisition amount (in case of rent for national or shared property)
  • ※ Related law: Article 19 of the Foreign Investment Promotion Act

Occupancy System for Suppliers

In case a company with occupancy in an FIZ requests that their suppliers with no foreign-held shares be permitted to occupy a part of the factory for the purpose of process shortening or cost reduction, it shall be permitted to move into the area under the evaluation by the committee and consent of the Minister of Trade, Industry and Energy. The contract shall be made within the remaining period of contract and should be renewed every five years. The area allowed for a subcontractor to move in shall not exceed 30 percent of the total building area of the factory of the relevant relocated company.