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Foreign Investment Zones

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Foreign investment zones are locations designated and announced by mayors or provincial governors to facilitate foreign investment and attract large-scale investors in accordance with the Foreign Investment Promotion Act.
Foreign investment zones are classified into complex-type, individual-type, and service-type zones. Each type has different conditions, requirements, limits, and investment incentives.
Complex-type foreign investment zones are designated for long-term leases at low cost, rather than direct ownership of land, considering the characteristics of foreign investment which requires sites for business operation for certain periods of time.
To occupy complex-type foreign investment zones, companies must be registered as a foreign-invested company where the share of foreign investment must be at least 30%. Eligible businesses (mostly manufacturing) are stipulated in a basic management plan. Limits on occupancy are as follows: contracted investment and the completion of factory establishment must be finished within five years from the date the occupancy contract is signed, and though the factory area may vary depending on the type of business, it must in general be at least 12% of the total leased area.
On the other hand, individual-type foreign investment zones are tailored for large-scale investors. Foreign investors can choose the location of their investment. Area is limited to the equivalent of 50% of the foreign investment amount invested by the occupying company.
Service-type foreign investment zones are designated for lease to foreign-invested companies that are engaged in high added-value services, such as research and development. The minimum investment amount in service-type foreign investment zones must be equal to or more than the price of the land or building to be leased, and the building area must be 40% of the standard factory area ratio, which is two times higher than the highest ratio. The foreign-invested companies must hire the minimum number of full-time workers per industry (five to fifteen workers). The execution of business plans (FDI, building construction area, hiring the minimum number of workers) must be completed within three years from the date of the occupancy contract is signed.
Designation of Foreign Investment Zones (Article 18 of the Foreign Investment Promotion Act)
Please refer to the information below Please refer to the information below
  1. negotiate - KOTRA, local government ↔ foreign investor
  2. make a decision on investment - foreign-invested company → KOTRA, local government
  3. negotiate practical businesses and establish development plans - KOTRA, local government ↔ ministry of trade, industry and energy
  4. request designation of foreign investment zone - local government → Ministry of Trade, Industry and Energy
  5. Review Feasibility of designation of foreign investment zone - Foreign Investment Promotion Division, Ministry of Trade, Industry and Energy
  6. deliberated by the foreign investment working committee - Chairperson : VICE Ministry of Trade, Industry and Energy
  7. approved by the foreign investment committee - Chairperson : Ministry of Trade, Industry and Energy
  8. announce designation - Local Government
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Comparison of Complex-Type and Individual-Type
Comparison of Complex-Type and Individual-Type : Category,Complex-Type Foreign Investment Zone,Individual-Type Foreign Investment Zone
Category Complex-Type Foreign Investment Zone Individual-Type Foreign Investment Zone
Overview Areas designated in existing industrial complexes to attract small- and medium-sized foreign-invested companies (from 1994) Areas deliberated and designated after large-scale investors choose (from 1997)
Location Industrial complexes (national and general) No limit (Investors’ choice)
Requirements for Designation (Occupancy)
  • Requirements for designation : See above
  • Requirements for occupancy : Foreign investment ratio of at least 30%·at least KRW 100 million
Requirements for designation : At least minimum amount designated for each business; decided after deliberation (USD 30 million for manufacturing, USD 20 million for tourism, USD 10 million for logistics)
Location Support
  • Purchase and lease land
  • ratio of central and local government expenditure
    • (Metropolitan) 30:70 (Non-metropolitan) 60:40
  • Purchase and lease land (if requested);
  • ratio of central and local government expenditure
    • (Metropolitan) 30:70 (Non-metropolitan) 60:40
Tax Reductions or Exemptions Requirements for reductions or exemptions
  • Manufacturing : At least USD 10 million
  • Logistics : At least USD 5 million
Same as for requirements for designation
Local tax Exempted for up to 15 years in accordance with local government ordinances Exempted for up to 15 years in accordance with local government ordinances
Tariff Exempted for 5 years from the date of import of capital goods Exempted for 5 years from the date of import of capital goods
Value-added tax N/A Exempted for 5 years from the date of import of capital goods
Rental Fee Reductions or Exemptions
  • Businesses dealing technologies for new growth engine industries worth USD 1 million or more: 100% for 10 years
  • Manufacturing worth USD 5 million or more: 75% (100% within special complexes for materials and parts)
  • Manufacturing worth USD 2.5 million or more with 200 full-time workers or more: 100%
  • Manufacturing worth USD 2.5 million or more with 150 full-time workers or more: 90%
  • Manufacturing worth USD 2.5 million or more with 70 full-time workers or more: 75%
100% when designated and leased
Limit on Occupancy (FDI)
  • Execution within 5 years from the date of occupancy contract (and retain)
  • Invest 100% or more of the site value (officially assessed price) (FDI)
  • Factory establishment area: Standard factory area ratio per business (at least 12%)
  • Execution within 5 years from the date of occupancy contract (and retain)
  • Minimum investment amount per business (two times or more of the site value
※ Companies that intend to receive reductions or exemptions of rental fees in foreign investment zones must submit supporting documents to a competent authority. Rental fees are reduced or exempted from the month in which a decision is made. Companies must pay the full rental fees until the completion of factory establishment.
There are three types of foreign investment zones: complex-type, individual-type, and service-type. Complex-type and individual-type zones offer low rental fees. If certain requirements are met, additional rental reductions and tax reductions or exemptions are applied. Service-type zones offer incentives to support rental fees, but no tax reductions or exemptions.

Designation of Foreign Investment Zones

As of the end of December 2018
Designation of Foreign Investment Zones : Complex-Type,Individual-Type,Service-Type
Complex-Type Individual-Type Service-Type
Number of FIZs 26 84 3

Complex-Type Foreign Investment Zones by Region

As of the end of December 2018
Please refer to the information below Please refer to the information below
  • Gyeonggi-do: Jangan1, Jangan2, Dangdong, Oseong
  • Gangwon: Munmak
  • Chungchengbuk-do: Ochang, Jincheon Sansu, Chungju
  • Gyeongsangbuk-do: Gumi, Gumi Parts, Pohang Parts
  • Chungcheongnam-do: Cheonan, Inju, Cheonan5, Songsan2, Songsan2-1
  • Daegu: Dalseong
  • Jeollabuk-do: Iksan Parts, National Food
  • Busan: Jisa, Mieum Parts
  • Gwangju: Woljeon
  • Gyeongsangnam-do: Sacheon, Changwon Parts
  • Jeollanam-do: Daebul, Gwangyang Sepung
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Rental Fees of Complex-type Foreign Investment Zones by Region

As of the end of December 2018
Rental Fees of Complex-type Foreign Investment Zones by Region : Complex,Monthly Rental (KRW/m2 per month)
Complex Monthly Rental
(KRW/m2 per month)
Complex Monthly Rental
(KRW/m2 per month)
Complex Monthly Rental
(KRW/m2 per month)
Cheonan
(Chungcheongnam-do)
310 Jangan 2
(Gyeonggi-do)
303 Woljeon
(Gwangju)
(First)190 / (Second)250
Daebul
(Jeollanam-do)
69 Dalseong
(Daegu)
218 Munmak
(Gangwon)
249
Sacheon
(Gyeongsangnam-do)
224 Gumi Parts
(Gyeongsangbuk-do)
151 Juncheon Sansu
(Chungcheongbuk-do)
144
Gumi
(Gyeongsangbuk-do)
165 Oseong
(Gyeonggi-do)
323 Songsan 2
(Chungcheongnam-do)
290
Ochang
(Chungcheongbuk-do)
223 Pohang Parts 127 National Food
(Jeollabuk-do)
126
Jangan 1
(Gyeonggi-do)
258 Iksan Parts 103 Chungju
(Chungcheongbuk-do)
160
Inju
(Chungcheongnam-do)
161 Changwon Nammun Parts 451 Songsan 2-1
(Chungcheongnam-do)
290
Dangdong
(Gyeonggi-do)
383 Mieum Parts 425 Gwangyang Sepung
(Jeollanam-do)
248
Jisa
(Busan)
438 Cheonan 5
(Chungcheongnam-do)
207