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Definition of Foreign Direct Investment (FDI)

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  • Definition of Foreign Direct Investment (FDI)
Foreign Direct Investment (FDI) is defined as an investment with an investment threshold contributed by foreigners amounting to at least KRW 100 million and being 10% or more of the total amount. Foreigners are able to do business in Korea without restraint, except as otherwise prescribed by regulations.
Types of FDI include the acquisition of stocks of domestic companies, long-term loans (five or more years) from parent companies outside Korea, and investments in non-profit corporations in the fields of science and technology.
Cases in which a foreign company uses unappropriated earned surpluses for building new or additional factories are now also considered FDI (to be enforced by 2020). Objects of investment to acquire stocks or shares include foreign currency, capital goods, proceeds from acquired stocks, etc., and industrial property rights.
FDI refers to an investment of not less than KRW 100 million made by foreigners. To be recognized as such, at least 10% of the voting stocks issued by a domestic corporation or business should be foreign owned, or at least 10% of the total investment amount should be made by foreign investors. Alternatively, foreigners may acquire less than 10% of stocks issued by a domestic corporation or business or invest less than 10% of the total investment amount but should dispatch or appoint an executive member who holds authority to participate in the major decision-making and management processes of the corporation or company.
  • Foreigner: An individual with a foreign nationality, a corporation established in accordance with foreign law, or an international economic cooperative organization as prescribed by Presidential Decree
  • Foreign investor: A foreigner who holds stocks, etc., or has contributed as prescribed by the Foreign Investment Promotion Act
※ Related law: Articles 2.1.1 and 2.1.5 of the Foreign Investment Promotion Act