Investing in Korea as the Gateway
to Northeast Asia
KILC
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
Korea International Logistics Council
Contents
1. Korea’s Strengths as a Logistics Hub
2. Logistics Investment Opportunities
3. Investment Procedure
4. Foreign Investment Trends
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
1
KILC
인프라 구축-
Korea’s Strengths as a Logistics Hub
Gwangyang Free Economic Zone Authority
Korea International
Logistics Council
광양만권경제자유구역청
인프라 구축- Location
Geographical
Located on the truck route connecting
Europe, Asia, North America
Located at the center of NEA
between China and Japan
Starting and Ending Point of
trans-continental railway
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
인프라 구축-to the NEA Market
Accessibility
NEA is emerging as a major
economic bloc alongside EU
KOREA
and North America
JAPAN
•Second largest economy in GDP
China
• World’s largest manufacturing base
• Fastest growing consumer market in the world
-25% of World Population
-20% of World GDP
-30% of World Cargo Volume
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
인프라 구축- Logistics Infrastructure
Excellent
1. Incheon International Airport
3rd Largest Cargo handler and 10th Largest passenger transporter in
international traffic (2004)
2. Busan Port and Gwangyang Port
- Busan : world’s fifth largest port, handling 11.5 million TEU per year (2004)
- Gwangyang : second largest port in Korea, optimal trans-shipment port for
cargo bound for Northeast Asia
3. Land Transportation
90% of domestic transportation is handled by roads and railways which
link the Eurasian and Pacific Rim economies
-The high-speed Korea Train Express (KTX) network started service in 2004
connecting Seoul with Busan and Mokpo(world’s fifth high-speed).
-Road length : 97,252km, Paved road length : 74,640km
(paved road rate:76.7% as of 2003)
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
Incheon International Airport
Unit : Thousand
Unit : Thousand tons
24,080
2,130
19,790
2003
1,840
2004
Passenger
2003
2004
Cargo
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
Busan Port
Number of routes
Americas
36
Europe
13
Asia
141
Japan
45
China
23
Source : Ministry of Maritime Affairs and Fisheries
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
Gwangyang Port
Number of routes
Americas
8
Europe
4
Asia
39
Japan
11
China
15
Source : Ministry of Maritime Affairs and Fisheries
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
인프라 구축Great
Investment Environment
1. Highly educated, highly skilled workforce
2. Huge Consumer Market
3. Strong Industrial Competitiveness
4. FDI Friendly Policies
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
2
KILC
인프라 구축-
Logistics Investment Opportunities
Gwangyang Free Economic Zone Authority
Korea International
Logistics Council
광양만권경제자유구역청
Logistics Investment Opportunities
1. Free Economic Zones
2. Free Trade Zones
3. Foreign Investment Zones
KILC
Gwangyang Free Economic Zone Authority
Korea International
Logistics Council
광양만권경제자유구역청
FEZ : Free Economic Zone
FTZ : Free Trade Zone
Concepts
of the FEZ and FTZ
인프라 구축-
Free Trade Zone (FTZ)
Free Economic Zone (FEZ)
Industrial
Park
A
…
PORT
Distripark
Industrial
Park
B
Support
Functions
…
Industrial
Park
N
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
Locations
of FEZs and FTZs
인프라 구축-
Incheon FEZ
Incheon International Airport
Incheon Port
Free Economic Zone
Free Trade Zone
Gunsan
Iksan
Busan-Jinhae FEZ
Masan
Gwangyang Bay Area FEZ
Gwangyang Port
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
Development
인프라 구축- Plans of the FEZs
Incheon FEZ
Songdo
IT, BT, international business
Yeongjong
air logistics, tourism, IBC
Cheongna
leisure, int’l finance
Incheon
Busan-Jinhae FEZ
Gwangyang FEZ
Busan
• NEA maritime transshipment hub
• Industrial clusters for oil and steel businesses
Gwangyang
• maritime logistics hub
• manufacturing & industrial parks, R&D
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
인프라
구축Tax Incentives
Type of Tax
National Tax
Local Tax
Exemption Period
Rate
Tariff,
Value-added Tax
100% for 3 years
Corporate tax,
Income tax
100% for 3 years,
50% for the
following 2 years
Acquisition tax,
Property tax,
Registration tax,
Aggregate land
tax
100% for 3 yeas,
50% for the
following 2 years
(Incheon)
Requirements
(minimum amount of investment)
All imported capital goods
US$ 5 million for Logistics
US$ 10 million for Manufacturing
100% for 7 years,
50% for the
following 3 years
(Busan-Jinhae)
100% for 15 years
(Gwangyang)
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
Other구축Incentives
인프라
▶ Rental reductions for using land
▶ Financial support for establishing
facilities for the convenience of foreigners
Employment,
인프라 구축Labor Management
▶ Initiating unpaid weekly holidays
▶ Not applying compulsory hiring system
(I.e. employing national war heroes,
the disabled, and the aged)
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
3
KILC
인프라 구축-
Investment Procedures
Gwangyang Free Economic Zone Authority
Korea International
Logistics Council
광양만권경제자유구역청

Investment Procedure
Investment Inquiry
Defining your investment requirements
Confirm foreign investment
One-Stop Service
Legal procedures for corporation establishment
FDI corporation established
KILC
Gwangyang Free Economic Zone Authority
Korea International
Logistics Council
광양만권경제자유구역청
인프라 for
구축Process
Establishing a Corporation
FDI
Notification
Carrying-in of
FDI Capital
Registration of
Incorporation
FDI Company
Registration
Account Transfer
Of Investment
Capital
Business
Registration
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
1. FDI Notification
 Notification by the foreign investor or proxy
 Notification at Korea Trade Centers at home and abroad, foreign
exchange banks designated to accept notification
 Required Documents : FDI notification form (provided) and
documents verifying the nationality of investors (Individual investors
shall submit a copy of passport)
 Processing Period : On-the-Spot
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
2. Carrying-in of FDI Captial
 Ways to carry in investment capital
- FDI capital may be remitted to domestic banks from overseas
- FDI capital may be hand-carried through the customs
 After Investment capital is remitted from overseas to a foreign
exchange bank in Korea, the capital shall be converted into Korean
won and be deposited into a temporary account
 Later, the capital will be transferred to a “share subscription
account”
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
3. Registration of Incorporation
 Types of Business Establishment
- By promotion : the promoters subscribe for all shares issued at the time of
establishment
- By public offering : the promoters subscribe for part of the shares issued at the
time of incorporation and the remaining shares publicly offered
 Categories of companies as stipulated in the Commercial Law
- Unlimited partnership company
- Limited partnership company
- Limited Liability company
- Corporation ← the most commonly selected form
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
Registration of Incorporation
 Procedures for Incorporation
•
Organizing Promoters
•
Holding inaugural meeting of promoters and preparing minutes
•
Preparing and notarizing the articles of incorporation
•
Deciding matters concerning the issuance of shares
•
Subscription of shares by promoters of company (for incorporation through
promotion) / Subscription of shares by promoters; joining of shareholders; and
distribution of shares (for incorporation through subscription)
•
Capital contribution
•
Reporting the inspection on the incorporation process by directors and auditors
•
Inaugural general meeting (not inquired in incorporation through promotion)
•
Meeting of the board of directors
•
Registration of incorporation
•
Notification of incorporation and business registration
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
Registration of Incorporation
 Place of registration : Commercial Registry Office, Local District Court
 Period of registration
- By promotion
: within 2 weeks after completing the inspection
on incorporation process
- By public offering : within 2 weeks after closing
the inaugural general meeting
 Pre-registration decisions
- Organizing promoters
- Checking up similar trade names
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
Registration of Incorporation
 Documents required for registration
Prepared by applicant
Assistance
1. Foreign investment notification form
6. Urban rail bond
7. Supreme Court revenue stamp
8. Registration tax receipt; issued by the ward office
exercising jurisdiction over the head office
9. Seal of each officer and promoter
10. Corporate Statue : notarized
11. Share subscription certificate
12. Application for shares
13. Organization report
14. Consent to shortening the inaugural meeting period
15. Minutes of the inaugural meeting : notarized
16. Minutes of the board of directors’ meeting : notarized
17. Common seal notification and application for
common seal card
18. Register of shareholders
19. Consent to issuance of shares
2. Power of attorney
▶If applied for by the representative director:
The representative director must be the appointee in all
powers of attorney
▶If applied for by a judicial scrivener:
The scrivener must be the appointee in the powers of
attorney regardless of promoters or officers
3. Acceptance of appointment of officer
▶Korean nationals : Each acceptance must be sealed,
to which a seal impression certificate and a resident
registration certificate must be attached.
▶Foreign nationals : Each acceptance must be signed
to which an original copy of signature notarization and
a photocopy of the passport must be attached.
4. Custody certificate of paid-in capital
5. Common seal of the company
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
Registration of Incorporation
 Business establishing expenses
Items to be paid
Registration Tax : 0.4% of the paid-in capital
(3 times as much if the company is to locate in a large city)
Approximate
amount
(Korean won)
600,000
Local education tax : 20% of the registration tax
120,000
Purchase of urban rail bond : 0.1% of the paid-in capital
50,000
Supreme Court revenue stamp (registration application fee)
15,000
Notarization fee (Corporate Statute, etc.)
150,000
Total
935,000
※ Approximate cost of establishing a corporation(with the capital of 50 million won)
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
4. Notification of Incorporation
and Business Registration
 Place of Notification / Registration
- the competent tax office which has jurisdiction over the company headquarter
 Notification / Registration Period
- within 20 days from business commencement for business registration
- within 2 months from the date on which incorporation registration was made
for notification of incorporation
 Required Documents
• Application form (available at tax office)
• Articles of incorporation
• Copy of business permit
(if the business requires a permission from the government authority)
• Copy of lease contract
• Notification of designating a tax manager
(in case where a company representative is a foreign national
and where there is no resident employee to received document delivery)
• Copy of FDI notification
• Certificate of foreign currency exchange
Gwangyang Free Economic Zone Authority
• Certificate of foreigner registration (where a representative of company is not a resident
of Korea)
광양만권경제자유구역청
5. Account Transfer of Investment Capital
After procedures for the registration of incorporation and business
registration, the remitted capital, which is deposited in a temporary
account, will be transferred to the company account.
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
6. FDI Company Registration
 Registration Period
Within 30 days from the date on which the payment required was completed
 Place
Institution where the FDI notification was filed
 Required Documents
• Application form for FDI company registration
• Certificate of exchange / deposit of foreign currency
• Transcript of incorporation registration
※A certificate of FDI notification shall be issued on the spot, and this certificate is required in following cases:
- When making an overseas remittance of the profits made by an FDI company
- When making an application for D-8 visa
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
4
KILC
인프라 구축-
Foreign Investment Trends
Gwangyang Free Economic Zone Authority
Korea International
Logistics Council
광양만권경제자유구역청
인프라 Investment
구축Foreign
by Country
unit : USD 1 million
Country
USA
Japan
EU
China
Others
Total
Year
2002
4,500
1,404
1,680
249
1,269
9,102
2003
1,240
541
3,062
50
1,575
6,848
2004
4,725
2,249
3,005
1,165
1,626
12,770
Source : Ministry of Commerce, Industry and Energy
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
인프라 Investment
구축Foreign
Proportion by Country (2004)
USA 37%
Japan 17.6%
EU 23.5%
China 9.1%
Others 12.7%
Source : Ministry of Commerce, Industry and Energy
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
인프라
구축-by Year and Accumulated FDI
FDI
Amount
FDI Accumuation(USD 1 milllion)
Year(USD 1 million)
18000
16000
120000
100000
14000
12000
10000
80000
60000
8000
6000
4000
40000
20000
2000
0
0
1998 2004
1962
Yearly Amount
신고(연도별)
Accumulate
신고(누적)
d
Gwangyang
Free Economic
Zone Authority
Source : Ministry of Commerce,
Industry
and Energy
광양만권경제자유구역청
인프라Status
구축- of Foreign Investment in the FEZs
Current
 As of June 2005, investment MOUs of over $18.9 billion established
Investor
Incheon
Business
Agreed Investment
amount
Investment Project
Gale(US)
FEZ
developer
$12.7 billion
-Songdo International Business
District Development
-Convention center(05.5)
AMEC(UK)
Engineering,
FEZ
developer
Second Incheon bridge
$1.2billion
IIA IBC-2 $2billion
-Second Incheon bridge construction
(09’)
- IIA IBC-II development(04.4 MOU)
Pyne(US)
Port
facilities
$1.5 billion
Songdo New Port Construction
DHL(US)
LSP
$ 20million
IIA freight terminal construction
TNT(Neth
erlands)
LSP
IIA freight terminal construction
$ 10million
Free Economic Zone Authority
Source: Ministry of FinanceGwangyang
and Economics
광양만권경제자유구역청
Major Foreign Investment in the FEZs
Investor
Busan
Jinhae
Gwangyang
Business
Agreed
Investment
Investment Project
Dubai port
Int’l( UAE)
Port
facilities
$300 million
-Busan New Port phase 1
development
RenaultSamsung
(France)
Automobile
$600 million
-Engine manufacturing plant
Hutcheson
(HK)
Port
facilities
$100 million
-Gwangyang Port
operation
TBA
-MOU to construct
logistics center in
Gwangyang port(04’.10)
Mitchui(JP)) Logistics
Source: Ministry of Finance and Economics
Gwangyang Free Economic Zone Authority
광양만권경제자유구역청
Conclusion
1. Strong Economy
2. Excellent Location as a Logistics Hub
3. Ideal investment Spots
4. Attractive Incentives
5. FDI Friendly Environment
Korea, the Ticket for 광양만권경제자유구역청
Your Success
Gwangyang Free Economic Zone Authority
Contact Us …
Korea International Logistics Council (KILC)
Korea International Trade Association (KITA)
Republic of Korea
Tel: +82-2-6000-5451~8
Fax: +82-2-6000-5460
http://kita.kilc.org
KILC
Gwangyang Free Economic Zone Authority
Korea International
Logistics Council
광양만권경제자유구역청