How to invest in Korea




グ. Advantages to Investing in Korea


A. Local Market with High Potential

If, as projected, the Korean economy grows by an average rate of 7% through the remainder of the 1990s, the nation's GNP will reach US$ 900 billion in current dollar value by the year of 2000. Thus, Korea is already an important international market and seems certain to become increasingly so in the future.

The Korean peninsula in northeast Asia is ideally located to provide easy access to its close neighbors China, Russian Far East, and Japan. Therefore, it can provide a springboard to China with enormous market potential, to Siberia with abundant natural resources and to Japan with high-technology.

The Korean people are well known for their strong commitment to higher education. The number of college students is about 340 per 10,000 persons, which is roughly comparable to the levels in developed countries. Korea's deeply-ingrained Confucian tradition is conducive to producing a loyal, hard-working, and well-trained labor force.

For the past nine years, Korea has placed first in this annual event, winning gold medals in more than half of the 33 fields of competition. In addition, productivity growth is generally higher in Korea than in its major competitors.

D. Political Stability

The administration of President Kim Young Sam has quickly laid the foundations for a mature democracy, removed the vestiges of past authoritarian politics, and initiated an ambitious program of economic reform and revitalization.

Particularly since the inauguration of the current civilian administration in February 1993, labor-management relations have become much more harmonious and stable than previously. Furthermore, the rate of wage increases has slowed down in recent years, bringing labor cost increased into line with productivity growth.

F. Advanced Technological Infrastructure

To support corporate R&D activities, the Korean government provides financial assistance amounting to $535 million through several financial channels such as the Industry Development Fund, the Basic Technology Development Fund and the Technology Financing Fund. Foreign investors in Korea are able to benefit from this assistance under certain conditions. In particular, unlike domestic firms, they are permitted to borrow short-term foreign capital.

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ケ. Improved Korean Climate of Foreign Investments:

Open-Door Policy and Deregulation


A. Administrative Deregulation

The reform package includes measures to assist foreign investors in acquiring land, constructing factories, raising funds, and handing labor-management relations. As a result of these reforms, foreign-invested firms will be placed on an equal legal footing with wholly Korean-owned companies.


B. Expanded Liberalization of Foreign Investment

The government's 'Five-Year Plan for Foreign Investment (1993-97)' clarifies existing ambiguities in the foreign investment codes and provides new incentives for foreign investors. For example, joint venture requirements in many sectors have been substantially eased for foreign investors, along with other restrictions on foreign-invested enterprises.


C. Improvements in Foreign Investment Procedures

The Korean government recognizes that protection of Intellectual Property Rights(IPR) is an important part of the overall foreign investment climate, particularly with regard to investments involving advanced technologies. At both the legislative and enforcement levels, Korea has made substantial progress in recent years to bring its IPR protection up to the highest international standard.

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ゲ. Advanced Foreign Investment Promotion Measures


A. Establishment of Free Investment Zones

Foreign invested firms are given the same benefits as domestic firms enjoy in overall tax incentives for small and medium industry, technology and manpower development, investment promotion, and so on. In addition, foreign investors may be eligible for tax exemption or reduction of income tax, corporate tax, tariff, special consumption tax, value added tax, and taxes on capital increases for the 5 year period if they are engaged in high-tech business or are located in the Free Export Zone.


C. Expanded Financial Assistance for Foreign-Invested Companies

Even in ordinary manufacturing businesses, foreign invested firms may borrow short-term foreign capital for the above stated period and purposes up to a maximum amount equivalent to 50% of their total invested amount.


D. New Government Agencies to Assist Foreign Investors

As an indication of its strong commitment to improving the nation's foreign investment climate, the government recently established the International Business Division in the Ministry of Trade, Industry and Energy(MOTIE).

The new division has two principal functions. The first is to plan and coordinate the government's program for reforming the foreign investment regime. The second is to provide a consulting service to foreign invested firms in order to help them resolve any difficulties they may have in doing business in Korea.

The latter function is the responsibility of the Ombudsman Office for Foreign Companies within the International Business Division. When a foreign investor's problem can not be solved directly by the International Business Division, the problem may be dealt with through liaison with other ministries and agencies.

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コ. Foreign Investment Related Organizations

The followings are the principal service centers for foreign investment in Korea.


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For further information, please mail to stwheel@sol.nuri.net

159-1 Samsong-dong Kangnam-gu Seoul, Korea
zip code 158-729, phone 82-2-551-0114, fax 82-2-551-5161

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